STOCK MARKET....Brinker didn't talk about the stock market today. However, the Dow has topped 25,000, reaching an intraday high Thursday of nearly 25,106 points, before closing at 25,075.13.
(Commentary from Barron's): The Dow reached five 1,000-point milestones last year. From the end of 2016 until the last day of trading on Friday, Dec. 29, 2017, the benchmark stock index climbed almost 5,000 points, to finish the first calendar year of the Trump Era at 24,719.22 — a 25 percent increase......
WHY PRICE/EARNINGS ESTIMATES VARY....Caller Carl from Chicago asked why there were different S&P 500 P/E ratio numbers in different places. Brinker replied that it varies because it is based on estimated earnings divided by the S&P 500. He stated that he uses the operating earnings.
Honey EC: Brinker's current P/E estimate is "17.5 to 18 times operating earnings"....and he predicts the S&P 500 Index will reach the 2800s this year.
==> THANKS TO DRAHME, audio clip: Hour 2 - The Tax Code + Paul - An Index Fund Bubble...Overweighting of Sectors in an Index Fund, Tech for example
==> THANKS TO DRAHME, audio clip: Hour 2 - The Tax Code + Paul - An Index Fund Bubble...Overweighting of Sectors in an Index Fund, Tech for example
BONDS, INTEREST RATES....BB commented that the FOMC will be "jabbering" next week. He expects at least 3 interest rate raises this year.
BRINKER'S MARKETIMER INCOME PORTFOLIO..... Caller Mark asked about Brinker's low-duration bond funds. Brinker explained that his income portfolio had a very good year in 2017. It returned 3.9% in 2017, and 4.7% for 2016 - equaling 9.5% over the last two years with "no interest rate risk."
Honey EC: As is shown in the article I posted just a few days ago, the return on that portfolio is well below what it would have been if he had not made the change to low-duration funds four years too soon.
Longer term bond funds, including Vanguard Ginnie Mae (VFIIX) have done much better, with much less market risk. Brinker traded interest rate risk for more market risk because some of his holdings now contain high-yield bonds:
DoubleLine Low Duration Bond Fund (DLSNX)
MetroWest Unconstrained Bond Fund (MWCRX)
Osterweis Strategic Income Fund (OSTIX)
UNEMPLOYMENT REPORT... Brinker opened the program with the latest jobs/employment numbers, and broke down educational and racial demographics. He stated that "black unemployment" was at 6.8%, but he did not point out the important fact that that number is THE LOWEST EVER.
THE TAX CHANGES: ("Motley Fool Compete Guide to the 2018 Tax Changes).... Brinker's opening monologue focused on the new tax cut plan. Once again, he zeroed in on the lowering of the real estate mortgage deduction - claiming that it will cause a mass exodus from high tax states.
Honey EC: A Schwab expert recently stated that the effects will be minimal and will only affect a few people in a small way. Excepts from Motley Fool - link below:
Honey's comments: Brinker sounds very bitter about this change that will cost those with $million dollar (or more) mortgages relatively small increased taxes. I wonder why, since his $million condo is in Henderson, Nevada.
I live in California and I can see how no-tax state's taxpayers would resent subsidizing rich Californians with this Federal deduction. Brinker called this a "gotcha moment." I call it fair play. Maybe California voters will think twice before they vote in any more people who are taxing this state into oblivion!
Brinker diligently found and singled out some small detail where there is a "marriage penalty" that didn't get removed. But "strangely" he missed this - from Motley Fool (link below)
If you're not familiar, here's a simplified version of how the marriage penalty works. Let's say that two single individuals each earned a taxable income of $90,000 per year. Under the old 2018 tax brackets, both of these individuals would fall into the 25% bracket for singles. However, if they were to get married, their combined income of $180,000 would catapult them into the 28% bracket. Under the new brackets, they would fall into the 24% marginal tax bracket, regardless of whether they got married or not.
In fact, the married filing jointly income thresholds are exactly double the single thresholds for all but the two highest tax brackets in the new tax law. In other words, the marriage penalty has been effectively eliminated for everyone except married couples earning more than $400,000.
Honey here: Brinker is clearly looking for ways to find fault with the new tax cut reform and is presenting only any negatives he can find. I highly recommend that everyone (who pays taxes) read this Motley Fool Complete (but concise) Guide to the 2018 Tax Changes.
==> Thanks to dRahme audio clip: Hour 1 - Taxes + Tony in Santa Clarita - Taxes as Charitable Contributions
FRANKJ'S MONEYTALK GUEST-AUTHOR SUMMARY
Bob Brinker kicked off a
new year of third hour interviews on January 7, 2018, with guest Barry
Eichengreen, co-author of the November 2017 release “How Global Currencies
Work: Past, Present and Future.” He had
some help writing this book, his co-authors are Arnaud Mehl and Livia Chitu.
Does bitcoin qualify as
“money?” No, according to the
guest. Money has to represent a store of
value; be a unit of account and provide a means of payment. Bitcoin does not meet these
requirements. It is not a store of
value or a unit of account because it fluctuates too much. You can pay for stuff with it, yeah, but the
there is too much computing power used up in making such payments.
If your assets are in
foreign currencies but your liabilities are denominated in dollars, you are, in
effect, a currency speculator. This has
been a topic Bob has brought up before on the show. Owning a bond fund invested in foreign bonds,
for example, puts you at an additional risk if the bonds are denominated in
foreign currency fluctuating against the dollar.
What currencies might rival
the dollar as a global currency?
The authors’ purpose in the
book was to argue that the US dollar does not necessarily have to be the only
global currency. That said, he did not
seem to be impressed with other currencies.
The yuan (Renminbi) is unsuitable he said because of unstable markets, a
lack of liquidity and capital controls in China. The yen in Japan went crazy in 1989 with
bank problems in that country. He likes
the Euro, particularly because of Germany’s stability which seems to more than
offset Italy’s problems. Forget about the British pound.
He advised that when books
begin to appear that a particular country’s currency will overtake the dollar
in global acceptance – look out, that is a precursor to that country running
into problems.
The Brexit will be an
economic disaster for the United Kingdom.
He thinks another referendum would come out differently but there is no
backbone in the political class for such a vote. He fears Great Britain will be “doomed” if
they go through with withdrawal from the European Union.
“Let’s get to those busy
phones…”
I guess they weren’t all
THAT busy because the only call taken was from Tim in Alaska who asked how we
justify our currency as being #1 when all we produce and sell is arms. (Is pot
legal in Alaska, too?) Despite the
nonsensical question the guest answered that we justify it because our economy
is doing well, and the recent tax cuts and Federal Reserve rate hikes are
“dollar positive.”
Bob wondered out loud if he
missed a meeting – referring to talk about an infrastructure stimulus bill in
Washington, DC, despite passage of the tax reform bill and unemployment at only
4.1%.
Bob, I don’t know if you missed a meeting but
you certainly “missed” plenty of shows in 2017.
The guest said there’s no
money for economic stimulus because reconciliation rules limit the borrowing it
would take to fund it so we would have to cut other programs to find the money
for infrastructure improvements. What to
cut? Medicare and Medicaid? No, these will not be cut by Congress, it would
require 60 votes in the Senate and that will not happen in “the world’s greatest deliberative body” as they have been described. The
guest is skeptical of private infrastructure efforts funded partially of wholly
through tax credits.
Bob pointed out that no one
in DC is talking about deficits anymore.
The guest agreed and said the majority in Congress is not worried about
these, but when this majority was in the minority they talked about it a
lot. He went on to say that the time to
make tax cuts and spend on infrastructure is when a recession begins. Having made tax cuts already, we are not in a
position to use that tool to fight off a recession. We’re going to be in trouble 10-20 years out
with the entitlements problem we have.
Bob wrapped up at
3:51.
Listen Live Online
62 comments:
AAII Sentiment Survey for week ending 1/3/2018
Bullish: 59.8%
Neutral: 24.7%
Bearish: 15.6%
Optimism among individual investors jumped to its highest level in more than seven years, according to the latest AAII Sentiment Survey. Pessimism, meanwhile is at its lowest level in more than three years.
Bullish sentiment, expectations that stock prices will rise over the next six months, surged 7.1 percentage points to 59.8%. Optimism was last higher on December 23, 2010 (63.3%). The historical average is 38.5%.
If memory serves me well, BB correctly issued a buy signal late 2011 – albeit without first raising cash. For you market-timers out there, you may want to consider starting to accumulating some “dry powder” should history repeat itself regarding mid-term congressional election stock market corrections.
Good luck!
1:46 pm, Bob is touting Washington state as a tax haven as opposed to moving to high tax Oregon. Hey Bob: Washington is blue enough thank you we don't need any more high tax blue state refugees moving here if they want to bring a progressive outlook with them that will lead to higher taxes. Washington's constitution says there cannot be a state income tax but that hasn't stopped people already here from trying to get an income tax established within the city limits of Olympia, and then Seattle. Both efforts were turned aside but these people don't give up easily.
.
As a Californian, I can say that I sure understand how you feel, Frankj.
Californians have already turned Oregon so blue they are giving us competition for being a "land of fruits and nuts."
I have family that has lived there their whole life and they tell me how unwelcome Californians have been for a long time. But hey, they've got big money for real estate - or whatever.
It's always a mystery to me why people will move because they don't like the way things are where they came from, then work diligently to make it into what they left - especially those who came from other countries.
Being surrounded by an insufferable amount of liberals (except for my friends) here in NYS, it is always amusing to watch how they always support any Democrat who is raising taxes -- but THEY THEMSELVES do not want THEIR taxes raised.
Democrats that I know complain about taxes just as much as anybody else does. What a bunch of hypocrites.
The liberals flee liberalism and then take it with them.
Please be very careful when viewing sentiment surveys. Their results can often be contra-indicators of stock market direction!
That's true about sentiment surveys. But maybe AAII has some data that shows what the market does for various periods of time after the survey results come in. That would be more useful.
Honeybee said: "Brinker traded interest rate risk for market risk because his holdings now contain largely high-yield bonds:
DoubleLine Low Duration Bond Fund (DLSNX)
MetroWest Unconstrained Bond Fund (MWCRX)
Osterweis Strategic Income Fund (OSTIX)"
Out of curiosity I checked the Vanguard site to see the published quality of the holdings of these funds:
DLSNX 81.3% investment grade (BBB) or better as of 11/30/2017
MWCRX 81.0% investment grade or better as of 9/30/2017
OSTIX 95.5% below investment grade as of 9/30/17
While the investment strategy of DLSNX and MWCRX allows investment of up to 50% in junk bonds, neither of these funds have been heavily invested in junk recently. Of the three, it looks to me that only OSTIX could be considered a true high-yield junk bond fund. Am I missing something?
Refs:
https://investor.vanguard.com/mutual-funds/profile/portfolio/X658?FundIntExt=EXT
https://investor.vanguard.com/mutual-funds/profile/portfolio/X791?FundIntExt=EXT
https://investor.vanguard.com/mutual-funds/profile/portfolio/F957?FundIntExt=EXT
.
Biker....As you said, DLSNX and MWCRX allow up to 50% junk bonds, and OSTIX IS a junk bond fund.
In the past, I have checked DLSNX and MWCRX and they both had higher level of junk bonds, so it appears those fund managers have lowered their percentage - but could raise that level to 50% tomorrow if they chose to.
Perhaps the managers need to appear to earn those high expense ratios Brinker has always been against. MWCRX actually charges over 1%!
Are you saying that Brinker's followers, like the one who called today who asked how he could find corporate bonds, are supposed to keep track of how many junk bonds are actually in their bond funds that allows up to 50%?
Not everyone who follows Brinker is as sophisticated about investing as you are, so I will continue to warn them when they are not being told the WHOLE truth.
Brinker can like it or lump it.
The Motley Fool Compete Guide to the 2018 Tax Changes says: "the interest on home equity debt can no longer be deducted at all, whereas [previously] up to $100,000 in home equity debt could be considered."
I think I heard Brinker say something similar on the radio today. I believe these statements are technically incorrect or at least misleading.
My understanding is that interest on home equity loans and home equity lines of credit (HELOCs) will still be deductible if used for home improvements (up to the new $750K max combined loan limit). If you take out a home loan to buy a car or to speculate on bitcoin, it would no longer be deductible. Here is what Kitces said:
"The final Tax Cuts and Jobs Cut splits the difference, placing a new cap on mortgage interest deductibility on the first $750,000 of debt principal (so-called “acquisition indebtedness” used to acquire, build, or substantially improve a primary residence or designated second home). Notably, though, the lower limitation only applies to new mortgages taken out after December 15th of 2017; any existing mortgages retain their deductibility of interest on the first $1,000,000 of debt principal, and a refinance of such mortgages in the future will retain their $1,000,000 debt limit (but only for the remaining debt balance, and not any additional debt). In addition, any houses that were under a binding written contract by December 15th to close on a principal residence purchased by January 1st of 2018 (and actually close by April 1st) will also be grandfathered. The original House GOP proposal to limit mortgage interest deductibility to only the primary residence was not retained in the final legislation; instead, the rules continue to apply to both a primary residence and a designated second home.
On the other hand, the final GOP Tax Plan did retain the decision to eliminate deductibility for any home equity indebtedness altogether, and without any grandfathering for existing home equity indebtedness. After 2017, interest on home equity indebtedness simply will no longer be deductible, period.
Though it’s important to note that “home equity indebtedness” under IRC Section 163(h) is not based on whether the loan is actually a “home equity loan” or “home equity line of credit”. Instead, the determination of “home equity indebtedness” vs “acquisition indebtedness” is based on how the mortgage proceeds are used.
Specifically, “acquisition indebtedness” is a mortgage used to acquire, build, or substantially improve the primary residence; “home equity indebtedness” is money used for any other purpose (e.g., for personal spending, refinancing credit cards, paying for college, buying a car, etc.). Thus, a HELOC that is used to build an expansion on a house is still treated as acquisition indebtedness (as it was used for a substantial improvement), while a cash-out refinance of a traditional 30-year mortgage used to repay credit cards will be “home equity indebtedness” for the cash-out portion."
Ref:
https://www.kitces.com/blog/final-gop-tax-plan-summary-tcja-2017-individual-tax-brackets-pass-through-strategies/
Honeybee said: "Not everyone who follows Brinker is as sophisticated about investing as you are, so I will continue to warn them when they are not being told the WHOLE truth."
And I would expect nothing less. It makes for entertaining and educational reading.
Similarly, if I note statements in this blog that seem misleading, I sometimes point them out. I would think that some give and take is healthy for the purpose of general understanding of investment matters.
My hope is that readers of this blog will become educated enough to know how to research and choose funds on their own based on things like asset type, expense ratio, duration, yield, credit quality, etc.
Good show to start the year!! I called about CONVERTIBLE BONDS..answers, guests, Bob B all straight and sharp. IRWIN in Skokie
.
Hi Irwin in Skokie....I remember your call - it was the second call in hour two.
Brinker gave you a good explanation about what convertible bonds are. He explained that they are "hybrids" and have equity holdings for a "kicker up or down."
It sounds like you were happy with his response.
I’m giving up on listening to Brinker. His obvious political bias against the current president, continuing rants about the state and local tax deduction, and playing recycled calls without identifying as such have pushed me over the edge. I guess I’ll hear about any new Brinker revelations through this blog. (Honey, hope that you keep up the good summaries)
Which podcasts do readers of this blog find to be useful on investment topics? I currently listen to David Stein, Roger Whitney, and Larry Kudlow. I have stopped listening to Ric Edelman, whose podcast is mostly a commercial for his firm.
Any other great investing or financial podcasts out there?
I had been meaning to post this interesting graphic for a while, but I guess the holidays distracted me a bit the past few weeks.
2017 Migration Patterns.
It will be interesting to see, going forward, how those folks that “got the shaft” as BB so eloquently phrased it yesterday, how the migration pattern will change for 2018, 2019, 2020 and beyond.
It is my understanding that the new SALT deductible is capped at $10,000 for the combination of state and local taxes and property taxes – and is NOT indexed to inflation.
Jester: not indexing for inflation -- from the Congressional bag of tricks. Remember how long deductible contributions to IRAs were stuck at $2000 per year? Another one.
Stinky: Jill Schlesinger has a good financial advice program you can listen to on podcasts. She's on weekends. She tends to spend more time with callers getting to the bottom of things they call about.
to STINKY, try MONEYRADIO 1510 from Phoenix..... like Larry Kudlow and his positive views are keeping me optimistic and shutting out the market doomers IRWIN in Skokie
To Stinky..
I listen to Gary Kaultbaum every afternoon at 6pm EST. at garykaultbaum.com. He is a big conservative but he will call it like it is on anything. He does not show favorites. He also knows a lot about the stock market.
It appears that the source material cited in my previous post is somewhat restricted.
Simply google:
2017 U.S. Moving Migration Patterns Report
And then click the link for the North American Van Lines map.
Heard BB salivating yesterday as he outlined the Fed's proposed 3 rate hikes in 2018.
He just can't wait to invoke his favorite mantra since 2009: "And the long-duration bond holders were TAKEN TO THE WOODSHED!"
Zippy, Redondo
Bonds are a whole another entity that I'm not comfortable with. I'll keep utilizing an active balanced fund to make decisions on duration. Most know my choice, but given the low cost, history, sitting within a investor owned powerhouse I'll take my chances their. I do see they are not shying away from 10yr even if interest rates rise. My guess they know more than Bob, just saying.
I balance off BB with Kudlow, but not to regular at that. Kudlow and guests are heavy weights within understanding the economy and markets. BB is better at personal finance and specific investing. Kudlow like Briker have stats with personal talk to help understand the overall big picture. BB has more of an infomercial bias to his politics and Marketimer. Kudlow has enough moxy and knowledge as most guests and he will challenge them and play Devils Advocate. You can cut to hour 2 to get specific stock market info. This week- Good explanation of concern on increasing trade imbalance and why it is currently a good thing. The tremendously improvement in international economies and why. Large internationals benefit so S&P 500 growth. GNP growth may be under 3%, but that is because of heavy corp investment for future improvement. Stock buy backs not a bad thing, just a thing. The show doesn't even talk of bonds and never has per my memory. Kudlow explains his simplistic approach is to index the market. Technology is still the champ to beat in '19 upwards to 20% growth. S&P could be poised for gain to mid 3,000. Not a good time to be out of the market. He did do a good job of explaining the Bannon factor. I don't know much of the guy other than a pleasant congenial fellow. Ex-Navy with superlative record. Kudlow likes him, but Bannon has horrible economic advice. His decision to go rouge was a career killer. Kudlow attributes the fall of Bannon to a portion of stock market gain.
My reading this week led me to believe junk bonds are just another investment to consider and part of why bond investing (to me) is so complicated. The general "good" junk bond will have shorter duration and on the high end of rating such as B.
The inversion of long term rate verses short term can be an indicator of coming recession. That would sometimes occurs 12-30 moths out. So, given the high gains usually achieved during this long time period one must just accept the warning and continue on with both eyes open. Problem with markets is they are so erratic. For example all your annual gains or losses could be within a few days. The average may even out, but belies the risky environment. It took a long bull market for averages and growth to look so good. One could look at average returns and be blind sided with poor returns going forward. Lower return bonds and gold both act differently upon economics and news cycle. They mitigate the draw down and preserve more of your base. The larger base will earn more for you, even if achieving less annual % rate in good times. Also, the act of rebalancing will push investors to buy low and sell high.
Oh, I forgot to mention that Kudlow discussion on interest rate hikes- it can be a good thing for markets. Normalise means good and a indicator of strength of economy. Surprising rate hikes not so good and rate hikes above normal will damage (cool off) economy. This category of interest rate is designed for such to fight inflation. Markets appear to have approved of handling of the Kim nuclear threat. Earnings including wage increase are estimated to good growth for '18.
Honey I have a question regarding marriage penalties now eliminated ... an unmarried couple will each be able to deduct 10k for a total of 20k but a married couple only has the 10k deduction so isn’t that a form of marriage penalty?
(my apologies if this has already been discussed and answered).
Why do we own bonds? For most, it is the stability they offer. Regarding junk bonds it is important to know that they tend to be correlated with equities when equities are struggling. And, they are not as liquid as they may seem. When managers of junk bond funds are forced to sell, they become "price takers."
Don't take my word for it, read what Larry Swedroe had to say about them in his book, "The Only Guide to a Winning Bond Strategy You'll Ever Need."
I don't own any junk bond funds.
Butterfly, we must have the same last name. What state do you hail from? I've had that nick name applied many times.
Trees............
When do you listen to Kudlow. Is he on the air regularly? Podcast?
Click for your choice of Kudlow streaming and podcasts.
Something’s wrong.
President Trump said he turned the economy around and is producing more jobs.
I just checked and job growth has slowed considerably. In reality, more jobs were created in 2016 than 2017.
Do I have correct info?
Money flow has turned negative. However, volatility is low that keeps the shorts away.
Anticipatory trend is lower.
.
Kilgore Trout...Instead of asking if you read something right, just post a link and we will look for ourselves.
Hi Honey. The unemployment records are public information.
Trump certainly has ‘turned around’ the economy.
More jobs were created in 2016, 2015, 2014, 2013 & 2012 according to the Government Accounting Office.
Found some jobs growth info here:
https://www.bls.gov/web/empsit/ceshighlights.pdf
Notable quotes:
"Over the year, job growth totaled 2.1 million, compared with a gain of 2.2 million in 2016."
"Over the past year government employment was also little changed (+42,000), after rising by 201,000 in 2016. The federal government lost 16,000 jobs in 2017, and job growth slowed to +77,000 over the year in local government from +160,000 in 2016."
Maybe there is reduced growth of government bureaucrats?
.
Hefner..... I don't get paid a dime for any of the comments that are published here. I just try to be fair to everyone.
Would you, or others prefer that I set down rules for what subjects can be discussed (beyond the ones in place about not insulting the moderator or other posters)?
If so, give me a list of subjects that you want me to allow - and you will need to be specific.
We are witnessing the end of the 3 longest bull market in History.
I’ve been cashing out of the market and buying gold.
The next correction won’t be pretty. The USAs printing presses are ramping up production of paper money. No discussion of balancing the budget or even reducing the deficit.
It's interesting to me that Bob lives in Nevada. I moved to Henderson about six months ago from SoCal to escape the congestion, poor relative value to cost ratio, nanny state politics, among some other things. It's a pretty nice place plus things get built and done here in short order! Only caveat is higher car registration although California just increased that, too. I've noted his commentary tends to encourage people in high tax states to consider relocating to lower cost locales.
Shiller PE ratio: http://www.multpl.com/shiller-pe/
CNN Fear and Greed Index: http://money.cnn.com/data/fear-and-greed/
Seems like the market has a lot of headwind. I'd say 70% downside and 30% upside potential over the next 12 to 18 months.
AD
My balanced mutual 60%-65% bonds has average maturity of 6.7 years. They invest only in investment grade (BBB or higher). Bonds can range from short, intermediate, long, corp, treasury, agency, asset backed, and mortgage backed. The advisor investment decisions based judgment within direction of interest rates within context of economy in general.
So, I'm thinking my judgement may not be as good as the "advisor". It looks like fixed income investing can be complicated. Here is an interesting and short take on junk bond myths. Yes, they act more like stocks, but not as volatile. I guess they have there place, but interesting the above fund doesn't touch them. Grade BB and below aka junk bonds are rated speculative. So, may speculating in stocks be just superior to speculating in bonds?
https://seekingalpha.com/article/4130235-junk-bond-myths
https://seekingalpha.com/article/4130235-junk-bond-myths
BTW, did anyone else read that Fidelity is taking a multiyear hit because in bet on commodities?
https://www.reuters.com/article/us-funds-fidelity-commodities/fidelity-retirement-funds-take-multiyear-hit-from-commodities-bet-idUSKBN1ET1NC
Also, I'm out of Scottrade financial house. They are in transition per buyout. Also, they utilise Schwab for trading. Schwab is great, but why not go there directly? It would seem the more expensive route would be to double up. Scottrade has expensive network of offices. You will receive an advisor, but that carries a premium as well. Advice is typical. They utilize a boat load of personal influence to make you stay. Also, I've experienced difficulty/complications in getting out. Search the net and this is typical experience of investors.
Also, Vanguard has changed top management and after reading his letter on the way forward, he wants to improve website as it is a bit clunky. Also, he thinks the industry may be changing. Basically, the threat is Blackrock and increasingly attractive ETFs. This investment device is very low cost including low cost trades. The device has facilitated robo advisors, smart indexing, and tax harvesting. This would seem the natural direction of things to come. Artificial intelligence is just beginning to flourish and compete with human skills. I see Black Rock has a dual momentum robot ETF. Wow, that may the path forward. Imagine the computing power minute by minute to analysis and make decisions. I think they even calculate the cost of trade to make the final decision. What if Google started selling investing robots?
TINA resilient market - Chinese reminded us today they are major holders of our bonds and the market responded at least initially so far.
On the other hand Buffett said this am. "Markets are not richly valued relative to rates".
___
Trees: I left Scottrade last year if Schwab is where you intend to go ask Schwab what they can offer you for your business. e.g., reimbursement of Scottrade full ACAT fee, free trades over top of what they already offer etc.
smile
Sorry HB for not adding links in prior post but just found them.
1) re: China is reportedly thinking of halting US Treasury purchases which has given Mkts a little case of jitters this am.
https://www.cnbc.com/video/2018/01/10/china-is-reportedly-thinking-of-halting-us-treasury-purchases.html
2) Full Buffett interview by B. Quick in the link below skip to 14min 29secs for "Markets are not richly valued relative to rates" also discussion of impact of Tax Cuts to Corporations and earnings as only Buffett can do.
https://www.cnbc.com/video/2018/01/10/warren-buffett-may-be-slowly-passing-the-baton-at-berkshire-hathaway.html
smile
Trees,
With all due respect, this Investopedia article gives a much more "fair and balanced" view of Fidelity's "commodity problem" with regard to retirement funds.
"Despite the poor performance from the Series Commodity Strategy Fund, Fidelity Freedom Funds, which become less aggressive as the investor nears his or her retirement date, performed better than more than 90% of rivals owing to bets on stocks".
For the entire article, please see:
https://goo.gl/gJC1kh
JC
Fidelity offers a stable value fund (Fixed Income Fund) yielding 2%+ only available to employer sponsored 401k, which is much better than the Vanguard Prime Money Market.
Larry Swedroe: Gurus’ Grim 2017 Tally.
Market forecasters lose again. [/Yawn].
I live in Bay Area CA
.
Once again, Bob Brinker is being proved 100% wrong. He repeatedly preached that the corporate tax cuts would all be kept by the corporations.
CNBC Short Video
Morningstar.com
Market Update
01-11-18
What a Thriving Global Economy Means for Stocks
Investors had a lot to be thankful for in 2017, including strong stock market returns--the S&P 500 was up more than 20% last year. But something else happened that was even more remarkable than a ninth straight year of stock market gains.
For the first time since the recession, all 45 countries tracked by the Organization for Economic Co-operation and Development enjoyed GDP growth. That includes Brazil and Russia, which had, until recently, been in a recession.
Investors and financial experts have been waiting for this moment for years. While U.S. GDP growth has been in positive territory since 2009, other parts of the world haven't been able to recover nearly as quickly. Just five years ago, the Eurozone was battling its own recession.
Now, though, it appears as if the world economy is firing on all cylinders. In November, the OECD said it expected the global economy to grow by 3.6% in 2017, up from 3.1% in 2016. This year should be another good one for global growth: The OECD expects the world's economy to expand by 3.7%, while all countries will continue experiencing GDP growth.
That's good news for investors. While economic growth doesn't always result in stock market growth, over the long term there is usually a positive correlation between them. Growing economies often make people feel better about their lots in life, which can lead to increased spending and higher stock prices.
About the Author:
Bryan Borzykowski is a Toronto-based business and investments writer. He’s contributed to the New York Times, CNBC, BBC Capital, CNNMoney and several other publications. Bryan’s also written three personal finance books and appears regularly on CTV News.
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From Fox Business this morning:
The S&P 500, the Dow Jones Industrials and the Nasdaq Composite hit fresh records at the opening bell on Friday as earnings seasons begins and optimism grows on tax reform benefits.
Earnings increase due to corp. tax cuts is an add for the markets. Not organic but doesn't matter and it is permanent. Anyone who has done discount cash flow valuation model for valuing a stock knows why even though it is not organic top line growth that it is still cash flow to bottom line and therefor impacts Intrinsic value.
The stock market IMO is in the process of adjusting up for corporate Tax cuts. Obviously not in the market.
I did a little selling for daughter's account today will take the proceeds and use toward tuition as I did at tail end of 2017. Leaving only 1 stock left to sell in her gifted account.
I am still looking at the exits for overall portfolio but plan to ride this bull till I see signs of growth impediments.
We should get a 1st look at 4th Qtr GDP in a couple of weeks. Should be interesting as economists are all over the map.
Mid-term elections may not be a factor this year as long as earnings over-perform, the economy continues to grow and the fed does not err on QT and rate normalization and slam the brakes on too hard.
The candle is lit, Stewart.
smile
Reading of the countries youth and their opinions. They will impact the country more than we can imagine. Their life experiences and sacrifice hasn't trained them up to be typical. The highest educated citizen class within our countries history have little concern of future risk and have a load of perceptions that lead them to believe the older citizens have selfishly savaged the country for wealth. They have been trained to believe the U.S. was wealthy only because of chance and ease to exploit resources and people. This is the typical international opinions as well wherein jealous foreigners wish to attribute our success likewise. Funny, I remember how my college pushed students to gain international experience to obtain balance thinking. Everyone that I knew that experienced a semester or two overseas came back with a big chip on the shoulder on how bad our country was.
It looks to me there is a growing current within those that are taking the reigns of power. Bernie represents step one, but within this growing popularity of the Socialist Left movement, Bernie, is much to conservative. This is the generation with ideals of sharing wealth. It is an entitlement mentality wherein life can be very easy and free of concern, if only. This will only occur within political power strong enough or popular enough to flip the country to a new deal with citizens. This Socialist group, with calculator in hand already figuring out how to diced up the wealth to help the less well off.
This is one reason the current politics are apoplectic with rage as in just short order the dream onced looked attainable only to get the rug pulled out and all the hard work got reset.
All of this to my thinking is reality and definitely some or all of this will be within our future. I just listened to Felix Salmon claim that basically we need a good old fashioned Depression to drive stock market backwards. To reset the wealth and allow the younger generations that currently have jobs to purchase cheap stocks and homes. This is the strategy to steal wealth from those that are not worthy. Also, giant national debt like Japans is fine. I think he thinks so because of the enormous burden will put out the economic fire and level the wealth.
There may be no way to hide wealth or put the resource within safe harbor once or if this type of thinking breaks out. I still think the best thing for retirees is to be more self sufficient. IOWs to minimize the cost of living, specially in regards to debt and housing. Polling data suggests this younger generation is really into the Social Security and single source health care. So, my plans will be to sell most of the rental property. The future for such investment just fraught with regulation and liability. I see this pattern already as entitlement generation will easily anger and go to court. This again is a zone of change. The new thinking values government to meet this need with much better value and fairness.
May it be better to plan on spending more money within early retirement, while the getting is good. Burn through more of the tax deferred money, as that may be more at risk. Enjoy your money while it's still available. Spend down to keep from being a target as a growing percentage of population that desires to reset the wealth savings.
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Note to all readers:
Sometimes I respond to others' posts, sometimes I don't.
Please do not mistake my silence for agreement.
I will give some leeway on philosophical political stuff - but will not tolerate bashing of the President.
What this administration is doing is what matters. All this hysteria about foul language is so blasted phoney, juvenile and wimpy it makes me sick. LBJ, Harry Truman, and many other presidents have said much worse. Keep your eyes on WHAT this administration is doing. We will keep getting better.
Correction aside, I am long. This smells like 1982 in America.
Pavlov’s Cat
I don’t care if President Trump uses locker room talk. Just thank God that American hating Muslim Obama is finally gone.
Tony the Tiger.
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Consider this as you invest (written by Lou Dobbs):
The stock market has gained an incredible 7.8 Trillion dollars in market value since @POTUS was elected! Looks like 4% economic growth in 4th quarter, lowest level of claims for unemployment benefits in 44 years, and black unemployment rate is the lowest (6.8%) on record! #MAGA
Many investors, mostly retail but not institutional, have been avoiding the stock market while U.S. stock prices taken off.
Per Wall Street Journal, outflows from mutual funds show nearly 1 trillion dollars in the most recent months.
Amen. Keep the Oregon libs from crossing the Columbia River
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