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Will the stock market ever catch up to our volatile President Trump?

SmartStops comment:   It’s alarming to think that Trump has no senior trained economists in his midst.  And that one who has given some advice has been told to keep quiet.

“The stock market is up about 15 percent since the election — despite the considerable turbulence that President Trump has wrought. Sooner or later, goes the thinking, a volatile president will mean volatility for markets…”

The big question is has the stock market gotten ahead of itself?   “Trump’s November victory because Wall Street expected a gusher of profits. Tax cuts for businesses would boost profits directly. Tax cuts for individuals would do so indirectly by spurring consumption. Deregulation would slash corporate compliance costs. An ambitious infrastructure program would fuel a construction bonanza .

This post-election logic was not crazy, but it overlooked the rather consequential question of presidential competence. It failed to anticipate that Trump would squander political capital by … ”

Read full opinion article at : https://www.washingtonpost.com/opinions/sooner-or-later-the-stock-market-will-catch-up-to-our-volatile-president-trump/2017/05/24/e5e87bba-3fe1-11e7-adba-394ee67a7582_story.html

 

Markets take the stairs up and the Elevator down

SmartStops comment:  Great article about the nature of our 21st century markets and why one needs to stay protected in a fluid geopolitical environment .  Some interesting graphs are presented.

The article concludes:    Perhaps more than any other time in the last six decades, the fate of markets is inextricably intertwined with the ebb and flow of geopolitics. Investors can no longer hope to conceptualize markets as existing in anything that even approximates a vacuum.

Author’s central point – how much our Fed and central banks get involved:

“True, DM central bank liquidity and jawboning (read: forward guidance tweaking) have thus far managed to suppress the market’s response in terms of volatility, but as it turns out, what central banks can’t do is keep Pyongyang from launching ballistic missiles, keep euroskeptic candidates from marshaling an alarming percentage of the vote in France, bridge the sectarian divide in the Mideast, keep Erdogan from effectively declaring himself Sultan in Turkey, and/or keep things stable inside the Beltway.

So while markets may be conditioned to effectively ignore what’s going on in the world, that doesn’t change the fact that things are getting more unstable virtually by the hour (witness the manic news cycle). Eventually, this will catch up to markets because again, central banks can’t ultimately control geopolitical outcomes.

Read more at: https://seekingalpha.com/article/4074212-wednesday-bloodbath-attack-heisenberg-raison-detre

Is this £406m investment guru the mystery buyer of ‘stock market crash insurance’?

Interesting article out of the UK about what Ruffer who is one of Britain’s leading fund managers and oversees billions of pounds of savers’ cash and has a personal fortune of £406m.  He is reported to be ‘stockpiling’ insurance against a market collapse.

The investor who has been hedging using VIX Option contracts on the US market was unidentified until recently.  He had been dubbed  “50 cent”, after the well-known rapper and musician (and because the contracts are priced at 50 cents each) .  Was recentlly identified in Financial Times as Jonathan Ruffer who oversees the Ruffer investment house.     Read more at:  http://www.telegraph.co.uk/investing/shares/406m-investment-guru-mystery-buyer-stock-market-crash-insurance/

How will you keep your investments protected?

Earn higher returns by avoiding the downturns

Just look at how much per share one could save in this example with IBM below.  Stepping aside during a stock’s downturn can lead to higher returns overall for your investments especially when you consider that stocks on average will drop ~20% from their highs and market leaders can drop ~70% (per Investor Business Daily stats).     Buy & Hold philosophies have morphed to Buy & Protect as many studies have shown the increased value in skipping the downturns.   At SmartStops our goal is to help you protect your profits and minimize any losses.

IBM_SmartStops_Performance

Survey shows adults struggle with financial literacy

One of the reasons SmartStops came into existence was to help investors worldwide understand the risk they were taking when owning a stock or ETF.  As the article points out:  “..Understanding risk is critical to a person’s financial well-being.”   The concept of Risk in the stock market originally focused on modern portfolio theory’s of diversification. But in today’s computerized/internet age, even that has shown to be insufficient.  We, at SmartStops, hope to help investors move into a more profitable Buy & Protect vs. Buy & Hold mindset by proving the efficacy of such an approach.

From article here:

Risk diversification. The concept that most people didn’t understand was risk diversification, or the idea that you need to diversify assets to minimize potential losses.

Lusardi, who teaches an elective course on personal finance to graduate business students at George Washington University, says she’s not surprised.

“I’ve seen the same thing in my class,” she said. “It’s just a harder concept because you’re talking about probabilities. And with diversification, you have to think about correlation. It’s just more complex.”

But understanding risk is critical to a person’s financial well-being. As Lusardi noted, most financial decisions involve some type of risk, from buying a home to deciding how much money to save for retirement.

And worldwide, it is becoming increasingly important to teach about risk and other financial basics.

See SmartStops-in-Action here.

$1M more in your IRA by avoiding major losses

SmartStops Comment:   Modern Portfolio Theory  – continues to have holes poked in it.  Here’s a post by Hedgeable reiterating the importance of missing the worst times in the market.

From their post:  If you merely miss out on 75% of market losses during the two largest crashes of the past 25 years- the dot-com crash and the financial crisis crash- you will have $1 MILLION MORE IN THE AVERAGE IRA ACCOUNT!!!

Hedgeable_Portfolio_without_75_percent_Losses

BaseBall fans will like the rest of the post too.  Read Entire Post

 

 Per Doug Kass: We’re Heading for a Bear Market So Plan Accordingly

SmartStops comment:   Interesting perspective posted on by Doug Kass (TheStreet.coM)  as to signals he’s watching.    

           SmartStops Mantra:     ALWAYS STAY PROTECTED !

From the article:     Since early August I have highlighted numerous technical divergences (in the weakness of the Russell Index (IWM) , new highs, the cumulative advance/decline lines, etc.), the schmeissing of the high-yield market (often seen as a precursor to stock vulnerability) coupled with growing evidence of weakening global economic growth (posing a threat to consensus corporate profit forecasts) and other factors (including valuation, sentiment and geopolitics) suggesting that a downward trend and (potential) bear market might be in the early state of developing.

History also shows that rising volatility in foreign exchange markets may be consistent with bear markets. (A good analysis by Nautilus Research can be found here.)

Economic weakness in Europe has been a worrisome factor that I have steadily highlighted.

Read entire article at:

http://www.thestreet.com/story/12904902/1/kass-on-the-market-i-am-throwing-down-the-bear-market-gauntlet.html?kval=dontmiss

 

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