Of bitcoin and other things

Happy New Year once again.

The market stumbled today, Tuesday, January 16th, but I doubt very much that where it finished yesterday or where it got intraday today – over 26,000 on the DOW – will mark its high watermark.  Rather, I think the market just needed to take a breather.  It’s earned it with the start it’s had out of the gate in 2018.

Much of its upward thrust is due to factors beyond America.  We’re in the midst of one of those rare worldwide , synchronous economic recoveries. The last one this strong goes back to when Eisenhower was President. Almost every country is participating – Europe, Japan, the U.S., even smaller places like Vietnam.

In America, Donald Trump may have turned many people off for his tweets, his childish behavior, and his fragile, needy personality.  But, boy oh boy! have his policies of tax relief, deregulation, and economic optimism ever driven our markets north!

Markets are often described as being driven by either fear or greed. For so many years this new century, ours and many others around the world have been driven by fear. Fear of recession, fear of another market collapse, fear of ISIS and terror, and much else.  It has been a long time – probably going back to 2000 – since our markets and our economy has been driven by greed.  Well, we’re there again.  John Maynard Keynes called it “animal spirits.” And those spirits are once again running wild like the bulls in Pamplona. If the Obama people told business, “You didn’t build it.” Trump’s policies tell them, “How can we help you build it?”

As a Christian, greed is a source of significant concern. But its presence in this imperfect world is also very helpful in encouraging investment and job growth, along with better returns on retirement portfolios.  So, greed can do some good. It won’t last; just like excessive fear won’t either.   But a sign of the greed running wild today is the phenomenal rise and current fall of bitcoin.

I’m not sure I can intelligently describe bitcoin.  Frankly, to me, it’s seemed like an attempt at creating an inexpensive replacement for air. It has no revenue, makes no profit. It is purely a speculation, like tulip bulbs once were in Holland, that has been undertaken by a seedy group of techies who were, at first, trying to skirt the law. Now, it’s invested in by people who, I find, don’t understand economics and don’t know when they’re gambling recklessly.  A lot of millennials who distrust capitalism in conventional markets and corporations seem to feel comfortable with bitcoin as their “stock” of choice. And interest rates have been low enough long enough – more fuel to power greed! – to facilitate bitcoin’s wild ride over the last year or so.

As I say, greed will not be riding tall in the saddle forever.  But I see no end to it this year, short of what may happen in the mid-term elections.  Of course, No. Korea could change things quickly or a successful terrorist strike or an EMP (or an electromagnetic pulse) or the unexpected bankruptcy of some sovereign nation.  For sure, right now, if I had to pick one area where I think problems might arise up ahead it would be debt related.  Not so much personal debt or corporate debt but government debt.  There’s just too much of it, and too much that we cannot pay for, yet people want – and seem to get – more and more entitlements.

So enjoy the moment. No, that’s not a veiled threat I see. Again, I really don’t see an end to the good times any time soon, and the positive effects from the tax changes are only beginning to enfold. Best advice I can offer you, my friends, is to stay invested in a broad array of low-cost, no-load funds and ETFs, running across equities, domestic and foreign; include some short term bonds, real estate, emerging markets stocks and bonds, maybe even a little bit of commodities.  But stay away from bitcoin, or if you must indulge, limit your investment to no more than 1% of what you have to invest, an amount you must be able to lose totally.

Understand your risk tolerance.  Don’t get too far out over your skis; meaning, make sure you’re sleeping at night.  If you’re feeling anxious about your investments, that’s a sign you’re taking too much risk. The last few years has brought too many people into stocks who are, at heart, savers.  They left bank account because they pay nothing.  Stocks are not CDs or bank savings accounts. But when things unwind, earning nothing can be much better than losing 25% – unless your temperament can stand losing 25% on paper and hold on until things turn around. Not everyone can.

God bless you this year. Do good things, and don’t focus too much on money.


Posted in economic recovery, fear, investment myths, investment wisdom, market corrections, market volatility, Personal Finance, retirement investing, saving, stock rallies, Successful living | 1 Comment

Happy New Year – and it was for investors who stayed invested

Hello, my dear readers.  I hope you had a good Christmas and will enjoy a happy, healthy, and prosperous new year in 2018.

As I write this, just after noon on the last trading day of 2017, American market are down.  No much, but they are down.  That’s fitting, believe it or not.  For though 2017 has been a strong year for the stock market, that doesn’t mean it will rise on the final trading day of the year.

You may not know it because, in the light of all that matters, it’s not that important. But the S&P 500 has fallen on the last trading day in each of the last three years, and it’s been down seven of the last 10. The average move on those days over that last decade has been a decline of 0.11%, and the median drop has been 0.45%.

And NASDAQ – the strongest of the three main, US markets this year – has also fallen seven out of the last 10 years on the final trading session, with a little larger average drop of 0.12% and a median decline of 0.61%. The Stock Trader’s Almanac notes that though the tech-heavy index was up for 29 straight years between 1971 and 1999 on the final trading day of the year, it’s been down 14 of the last 17 years.  Go figure!

Let’s not complain, however the market finishes this last day of the trading year at 2 pm.  The Dow Jones Industrial Average is up about 26% this year, the S&P 500 is up about 20%, and the tech-heavy NASDAQ is up about 29%. Those are stunning numbers, the best since 2013 and very unexpected by many who saw Trump as a potential danger to investors and markets.  Of course, if you weren’t invested or pulled out, this has not been a great year for your retirement portfolio.

Maybe more surprising than the returns to investors this year is how steady markets have been.  Not even a5% pull back. And the DOW has risen for nine months in a row, NASDAQ for 11.

However, is this the end? Should you now get off this train?  Many think so.  I don’t share that negativity.  We are living through a world-wide synchronous economic recovery.  They don’t come along very often. We’ve just passed a powerful tax reform elixir that has yet to show its magic.  But I believe it will, less for individuals, and much more for the economy, for business, for investors, and jobs.  I think you should, as you might be told at an amusement park, “Sit back, buckle up, and enjoy the ride.”

Get your asset allocation right, with stocks, bonds, real estate and smaller holding in proportions you’re comfortable with, that lets you sleep at night, and then ride that out.  Don’t keep fussing with it, or over it. In fact, if you’re fussing, you may not be an investor.  You may be a saver, which is OK. But savers today make a percent or so on their one-year CDs.  That’s not all that helpful towards retirement, but it’s better than spending one percent more.

God bless you all.

Posted in economic recovery, fear, investment myths, investment wisdom, market volatility, Personal Finance, retirement investing, saving, stock rallies, Successful living | Leave a comment

December is off to a disappointing start

Here’s a chart worth a moment of your time. It’s from the Bespoke Investment Group in New York, showing us the average monthly returns from stocks for the last 100 years, the last 50 years, and the last 20 years.

December is, typically, a great month. But this December, just three trading days old is not following the pattern: uncharacteristically, the first three days have been down.  The tech-heavy NASDAQ has been especially hard-hit.  But it has risen the most of America’s three major indices this year-to-date.

Do I sense it’s time to “head for the hills”? Not at all. I think markets are just taking a break after a very good and e citing week last week.

If any of you are in bitcoin, I hope you will exit soon. Now there is an investment which, I think, is screaming, “head for the hills”.

Blessings to you, my friends.


Posted in fear, investment myths, investment wisdom, Market falls, Personal Finance, retirement investing, saving, stock rallies | Leave a comment

Some thoughts worth pondering on personal spending

Happy Thanksgiving to all my readers.  God bless you, too.

I try to help my readers understand investment markets because I want you to be good stewards of your retirement funds.  You’ll need them. I want you to have money later in life – if you’re not, by the way, already in “later life.”

But in addition to helping you MAKE money, I also want to challenge you to be more careful in your spending. Your own retirement won’t care if you have extra money from your investments or from not spending money foolishly. Money is fungible.

The article below was published on The Motley Fool website over the weekend.  It makes some great points in helping us not spend hard-earned money carelessly.  I hope it makes you thing. Ponder its wisdom.


4 Stats That Will Make You Hate Black Friday

Overspending, credit card debt, parking lot fights, and the erosion of the Thanksgiving holiday — what’s not to love?

Nov 18, 2017 at 10:11AM
Nearly two-thirds of American shoppers plan to get up early (or stay up late) and brave huge crowds in order to scramble for the best holiday gift deals on Black Friday and throughout the holiday weekend. Some shoppers simply love the thrill of getting a good deal or finding that perfect gift for their loved ones.

But, of course, there’s a dark side to Black Friday well. Parking lot fights, stampedes, overworked employees, and increased debt are ugly hallmarks of the American holiday shopping season. If you have an inclination to spend your post-Thanksgiving hours scouring retail shelves for this year’s hottest gifts, here are four Black Friday stats that might make you think twice.

1. 40% of Americans bust their budget looking for great deals

The time between Black Friday and Christmas brings in about 30% to 40% of annual sales for many retail companies, according to the National Retail Federation (NRF). This year, holiday retail sales are expected to reach up to $682 billion, up from $655.8 billion in 2016.

All of this spending provides a nice boost to the economy, of course, but it also comes at the expense of many consumers’ personal budgets. About 40% of shoppers overspent on holiday gifts last year, according to a survey conducted by Elevate’s Center for the New Middle Class.

While it’s not exactly shocking that many Americans spent more than they were planning to, it is surprising why they did it. According to the survey, shoppers were 45% more likely to overspend when they were actually looking for great deals.

Perhaps seeing more sales enticed them to spend more money, or buying lots of gifts to maximize perceived savings was the culprit. Either way, many Americans bust their holiday shopping budgets for the sake of a good deal — and that’s bad news for their personal finances.

2. 25% of shoppers will need three months to pay off holiday debts

While spending more than we want on holiday gifts isn’t good, what’s worse is that one-quarter of American shoppers spend so much on Black Friday (and over the holiday season) that it takes us three months to pay it off, according to 2016 survey by TD Bank.

Think on that for just a second; it takes 25% of Americans one-quarter of a year to pay off holiday debts. And don’t think it’s just shoppers with subprime credit that are having problems. A recent Goldman Sachs survey showed that Americans with credit scores of 660 or higher struggle with credit card debt too.

Americans now have more than $1 trillion in outstanding revolving credit card debt, some of the highest since the Great Recession days back in 2008. And consumers say they’ll spend about $967 on holiday shopping this year, up from about $935 in 2016. All of which means Americans aren’t likely to give up their tradition of accumulating more holiday debt just yet.

3. At least three people were killed during Black Friday last year

Even with rising online sales, nearly 102 million Americans went out for Black Friday deals last year, a huge increase from 74 million the year before.

Unfortunately, some shoppers occasionally turn violent during the intense shopping times. A Black Friday shooting in a New Jersey mall last year left one man dead and his brother injured, and another shooting the same day in a Memphis, Tennessee mall left another man dead. If that weren’t bad enough, two men began shooting at each other in a Wal-Mart parking lot last year as they fought over a parking space, and one of the men died from his injuries.

According to the depressingly named website, www.blackfridaydeathcount.com, 10 people have died on the popular shopping day and more than 100 have been injured since 2006 due to shootings, stampedes, robberies, and fights.

4. 32 million people shop on Thanksgiving Day

While most of us get to to enjoy a day off with family and friends, many retail worker have to cut their Thanksgiving holiday short and clock-in for work. About 75 popular retail stores will be closed on Thanksgiving, but many stores including Best Buy, Cabela’s, JCPenney, Target and Wal-Mart will be open for at least part of the day.

The NRF says that 34% of 2016 holiday shoppers stepped foot in a retail store on Thanksgiving day. There’s been a trend over the past few years for retailers to keep their doors closed on Thanksgiving, but the NRF says that 20% of holiday shoppers — or 32 million people — plan to shop on the holiday this year, which incents big retailers to open up.

Sure, employees usually get paid more on Thanksgiving because it’s a holiday, but as many of us already know, getting paid more money isn’t always worth the work. And staying open on the Thanksgiving holiday only feeds America’s growing problem of taking less vacation time than workers in other countries.

Some holiday tips

You don’t have to give up holiday shopping completely this year, but you can avoid some of theses cringe-worthy statistics with some simple changes to your shopping habits.

The first, and most obvious, is to avoid shopping on Black Friday. There’s plenty of evidence showing that you can get great deals over the entire holiday shopping season. Second, make a budget. Shoppers that don’t set a budget are 87% more likely to say they spent more than they planned on, compared to those who set a limit.Finally, remember that while it’s fun to give gifts, going into debt for them simply isn’t worth it.

Posted in investment myths, investment wisdom, Personal Finance, retirement investing, spending, Successful living | 2 Comments

When will this end?

I hear so many friends and acquaintances asking the question, “When will this end?”  Or, “how will it end?”

Well, as is my custom, I must state that I am not clairvoyant. I don’t know when “it” – i.e., this bull market in stocks – will end. But, I assure you all that there is a correction coming and, also, a bear market. But just when? I don’t know.

However, it’s not enough to say that, “Since this thing has started in 2009, it’s long past due for a big correction.”

Markets don’t work like that. You probably know that.  Or, if bull markets finally come to work that way, then we’re going to see the strangest correction of all time, given the inflation we don’t have, the low interest rates we have, the employment and wages we do, the earnings growth here in America and around the world.

This just is not the way bull markets end.

Moreover, there is not only no euphoria, which usually accompanies market tops; but globally, investors remain skeptical and very wary. Clearly, ghosts of 2000 and 2008 continue to haunt investors’ sentiment, which, need I remind you, is also very bullish.

Many others factors continue to support this view. This bull market will die, likely, when the Fed sees fit to tighten meaningfully – which they are not doing now – by draining liquidity from the system (raising rates a lot); or maybe by raising the discount rate many times in succession; or maybe by inverting the yield curve. But these and other steps will, however, only be taken when the economy overheats (which it hasn’t); when inflation surges (which it hasn’t); and speculation is rampant (which it isn’t).

In America, companies are doing so many things better, faster, cheaper, and for the customer. The biggest threat they face now, I think, is political. Don’t kid yourself: politicians are capable of inflicting great damage on both businesses and investors. Importantly, and differently, unlike the business trusts that were the rage in the late 19th and early 20th centuries, and were busted up by the government, today’s businesses are much more popular with their stakeholders. (Think Apple.) That fact also leads me to believe that this bull market ain’t over yet.

Back in the year 2000, when the dot.com bubble was about to burst, it may have been very smart keeping a lot of cash available.  But in 1455, with the invention of movable type (which enabled Gutenberg to print his Bible) and launch the explosion of mankind’s ability to communicate, was that a bubble? Or, how about 1820, with the coming of the steam engine, was that a bubble in manufacturing and transportation?

I don’t believe they were bubbles, and I don’t believe that we are in the midst of a stock bubble today either. We live, for better and for worse, in a time of significant leaping forward in technology and productivity – also of partisanship in politics, arrested development on the part of many younger folks addicted to their social networks and devices, and poorly educated and ill-prepared young people to enter life and the work world.  But this is still a great time in world history for technology and productivity.

So, I share with you my own conviction that our joyless, much-hated, and much-doubted bull market will keep bumping along. Those of you inclined to believe in gloom and doom, and those of you hearing others worried that another bear market is peeking around the corner: because, well, on the surface of things, the world is a mess and may not change much; or that it has been nine years since the last bear market, or that now is the time to get out of stocks, or at least lighten up, to all of them, I say, “Watch out!”

While it might feel good-in-the-moment to take money off the table and assume a regression-to-the-mean is soon going to be upon us based upon recent history, seeking comfort has never been the basis of a winning strategy in the stock market. Neither has being, or becoming, a market timer. Meanwhile stocks, in general, with their predictable backing and filling, and occasional and unpredictable downdrafts, continue to rise.

The stock market tends to be a predictor, of course, not of the past, nor even a confirmer of the present, but a predictor of future economic change, discounted back to the present.

So, my take, as of now, for what it’s worth, is that there are great things taking place that are not readily apparent. Behind the outrageous political noise of our day, American businesses are participating in one of the greatest growth and productivity surges the world has ever seen.

Interestingly, too, this technological leap forward is taking place at the same time that increasing transparency (made possible by technology, too) is making it more fashionable to do the right thing. Even a small shift toward more ethical behavior opens up an even bigger opportunity for American businesses operating throughout the world. In short, I see plenty of reasons why the current bull market could be extended. All this does not imply that my current worldview is without risk nor that bear markets and recessions have been repealed: they have not. There are real threats, for sure. (Like No. Korea.) But in my opinion, it is not the time to run for cover, at least not yet. Let us react to the things we can control, not the things or the feelings we can’t.

If this sounds like I am trafficking in a bit of faith and hope, you got it. I traffic in a lot of that stuff. Someday, I hope everyone reading my stuff might as well.

God bless you all.


Posted in bubbles, economic recovery, fear, investment myths, investment wisdom, market corrections, stock rallies, Successful living | Leave a comment