Friday , January 24 2020
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Lance Roberts

Lance Roberts

Lance Roberts has sharpened that lens with 30 years in the investing world from private banking and investment management to private and venture capital. Lance Roberts’ perspective and common sense analysis is sought after by media outlets such as Fox 26 News in Houston, CNBC, CNN and Fox Business News along with numerous publications including the Wall Street Journal, USA Today, Reuters and the Washington Post. Roberts is the Editor of the X-Factor report and publishes the blog Daily X-change.

Articles by Lance Roberts

Yes, Rates Are Still Going To Zero

1 day ago

“If the U.S. economy entered a recession soon and interest rates fell in line with levels seen during the moderate recessions of 1990 and 2001, yields on even longer-dated Treasury securities could fall to or below zero.” – Senior Fed Economist, Michael Kiley – January 20, 2020
I was emailed this article no less than twenty times within a few hours of it hitting the press. Of course, this was not a surprise to us. To wit:
“Outside of other events such as the S&L Crisis, Asian Contagion, Long-Term Capital Management, etc. which all drove money out of stocks and into bonds pushing rates lower, recessionary environments are especially prone at suppressing rates further. Given the current low level of interest rates, the next recessionary bout in the economy will very likely see rates near

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Technically Speaking: Extreme Deviations & Eventual Outcomes

3 days ago

The good news is that with the market closed yesterday, the extreme extensions of the market did not get any more extreme. Also, it doesn’t change our analysis much from this past weekend’s missive either:
“This week, the market pushed those deviations even further as the S&P 500 has now pushed into 3-standard deviation territory above the 200-WEEK moving average.”

“There have only been a few points over the last 25-years where such deviations from the long-term mean were prevalent. In every case, the extensions were met by a decline, sometimes mild, sometimes much more extreme.”
As we discussed, there is a potential the current “momentum” push, due to the Fed’s ongoing “NotQE,” which could drive markets higher in the short-term.
“With the Federal Reserve’s ongoing ‘Not QE,’  it is

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Market Continues “Euphoric” Advance As 3500 Becomes Next Target

6 days ago

Market Continues Euphoric Advance
Portfolio Position Review
MacroView: 2020 Market Outlook (Video)
Financial Planning Corner: By The Numbers For 2020
Sector & Market Analysis
401k Plan Manager

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Catch Up On What You Missed Last Week

Market Continues Euphoric Advance
In last week’s missive, I discussed a couple of charts which suggested the markets are pushing limits which have previously resulted in fairly brutal reversions. This week, the market pushed those deviations even further as the S&P 500 has now pushed into 3-standard deviation territory above the 200-WEEK moving average.

There have only been a few points over the last 25-years where such deviations from the long-term mean were prevalent. In every case,

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#WhatYouMissed On RIA: Week Of 01-13-20

7 days ago

We know you get busy and don’t check our website as often as you might like. Plus, with so much content being pushed out every week from the RIA Team, we thought we would send you a weekly synopsis of everything you might have missed.

The Week In Blogs

The Best Of “The Lance Roberts Show

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Video Of The Week

Lance Roberts & Michael Lebowitz discuss how the Federal Reserve has gotten itself trapped in its own liquidity program.

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Our Best Tweets Of The Week

I keep hearing nonsense about how the Fed’s actions are not responsible for the market going up. Instead they claim there is a shortage of assets. Why is there a shortage? Could it be the nearly $4 trillion in assets the Fed removed from the market?— Michael Lebowitz, CFA

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The Fed Won’t Avert The Next “Crisis,” They Will Cause It.

8 days ago

John Mauldin recently penned an interesting piece:
“Ignoring problems rarely solves them. You need to deal with them—not just the effects, but the underlying causes, or else they usually get worse. In the developed world, and especially the US, and even in China, our economic challenges are rapidly approaching that point. Things that would have been easily fixed a decade ago, or even five years ago, will soon be unsolvable by conventional means.
Yes, we did indeed need the Federal Reserve to provide liquidity during the initial crisis. But after that, the Fed kept rates too low for too long, reinforcing the wealth and income disparities and creating new bubbles we will have to deal with in the not-too-distant future.
This wasn’t a ‘beautiful deleveraging’ as you call it. It was the ugly

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Seth Levine: The Unsurprising Repo Surprise

8 days ago

Have you heard? There’s trouble in the repo markets. Even casual investment market participants probably know that something’s amiss. While only a handful of investors participate in repo, this obscure corner of the investment markets rests at the epicenter of the financial system—hence all the attention. The turmoil caught many by surprise, prompting the Federal Reserve (Fed) into emergency action. However, the real surprise is, in my opinion, why this took any of us by surprise to begin with?
What is Repo
Repo is financial jargon for a repurchase agreement. While it sounds complex, repo is simply a form of short-term, secured lending. The borrower sells collateral (typically a high quality bond) to a lender. At the same time, it agrees to repurchase the same collateral back at a later

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Technically Speaking: This Is Nuts – Part Deux

10 days ago

In this past weekend’s newsletter, we discussed the exceedingly deviated price, and overbought conditions, not to mention valuations, as key reasons why we slightly reduced risk in our portfolios.
“On Friday, we began the orderly process of reducing exposure in our portfolios to take in profits, reduce portfolio risk, and raise cash levels. 
In the Equity Portfolios, we reduced our weightings in some of our more extended holdings such as Apple (AAPL,) Microsoft (MSFT), United Healthcare (UNH), Johnson & Johnson (JNJ), and Micron (MU.)
In the ETF Sector Rotation Portfolio, we reduced our overweight positions in Technology (XLK), Healthcare (XLV), Mortgage Real Estate (REM), Communications (XLC), Discretionary (XLY) back to portfolio weightings for now.”
Not surprisingly, I received more

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Comparison & The Role Your Advisor Should Play

11 days ago

A recent article on MarketWatch by Sanjib Saha caught my attention:
“After taking the Series 65 exam last February, I set a goal for 2019: Help 10 friends and family members with their finances. Instead of giving specific investment advice, I wanted to educate them on money matters. I knew that they would benefit from one-on-one discussions, well-regarded books, educational videos and credible websites.”
Think about that for a moment. Here is a young man, who grew up during the longest bull market in history, just took his exam last year, has no real investment experience to speak of, and is now giving advice to people with no investment knowledge.
What could possibly go wrong?
While the majority of the article is grossly misinformed and a regurgitation of the “bullish mantras,” there was

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This Is Nuts & Why We Reduced Risk On Friday

13 days ago

This Is Nuts
Portfolio Position Review
MacroView: Has The Fed Trapped Itself?
Financial Planning Corner: By The Numbers For 2020
Sector & Market Analysis
401k Plan Manager

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Catch Up On What You Missed Last Week

Market Review & Update
When you sit down with your portfolio management team, and the first comment made is “this is nuts,” it’s probably time to think about your overall portfolio risk. On Friday, that was how the investment committee both started and ended – “this is nuts.” 
We have been discussing the overbought, extended, and complacent market over the last couple of weeks, but on Friday, I tweeted out a couple of charts that illustrated the excess. 
The first chart was comparing the Nasdaq to the S&P 500

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MacroView: Has The Fed Trapped Itself?

13 days ago

“Don’t fight the Fed”
That’s how I started out last week’s “Macroview.”
“That is the current mantra of the market as we begin 2020, and it certainly seems to be the right call. Over the last few months, the Federal Reserve has continued its ‘QE-Not QE’ operations, which has dramatically expanded its balance sheet. Many argue, rightly, the current monetary interventions by the Fed are technically ‘Not QE’ because they are purchasing Treasury Bills rather than longer-term Treasury Notes.
However, ‘Mr. Market’ doesn’t see it that way. As the old saying goes, ‘if it looks, walks, and quacks like a duck…it’s a duck.’” 

As we discussed, there is something “broken” in the financial system when it requires massive injections of capital to maintain sufficient liquidity. This was a point noted by

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FPC: All The Numbers You Need To Know For 2020

13 days ago

REGISTER NOW for our most popular workshop:
THE RIGHT LANE RETIREMENT CLASS
The Westin Austin at the Domain- 11301 Domain Drive, Austin, TX 78758
February 8th from 9-11am.

Hopefully you’ve had some time to reflect and grade yourself on your financial progress for 2019 and you’re ready to take 2020 by the horns. The new year brings new numbers to be aware of to ensure you’re taking advantage of all you can. There are many contribution limits, income limits and a vast array of numbers used in financial planning, but here are a few more common ones to make sure you’re staying on track.
Retirement Plans:
For employees:
401(k), 403(b), most 457 plans and the federal governments Thrift Savings Plan employee contributions have increased from $19,000 to $19,500. The maximum amount employees +

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#WhatYouMissed On RIA: Week Of 01-06-20

14 days ago

This past week was our annual family ski trip, which is why our postings have been lighter than normal this week. We will return next week back with our full schedule.

In the meantime, we know you get busy and don’t check on our website as often as you might like. Plus, with so much content being pushed out every week from the RIA Team, we thought we would send you a weekly synopsis of everything that you might have missed.

The Week In Blogs

The Best Of “The Lance Roberts Show

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Video Of The Week

Michael Lebowitz & I discussing the Fed Repo operations and the trap they have gotten themselves into.

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Our Best Tweets Of The Week

Peakest complacency— Michael Lebowitz, CFA (@michaellebowitz) January 9, 2020
Lots of commentary about

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Market Bubbles: It’s Not The Price, It’s The Mentality.

15 days ago

“Actually, one of the dangers is that people could be throwing risk to the wind and this [market] could be a runaway. We sometimes call that a melt-up and produces prices too high and then if there’s a shock, you come down to Earth and that could impact sentiment. I think this market is fully valued and not undervalued, but I don’t think it’s overvalued,” – Jeremy Siegel
Here is an interesting thing.
“Market bubbles have NOTHING to do with valuations or fundamentals.”
Hold on…don’t start screaming “heretic,” and building gallows just yet.
Let me explain.
I can’t entirely agree with Siegel on the market being “fairly valued.” As shown in the chart below, the S&P 500 is currently trading nearly 90% above its long-term median, which is expensive from a historical perspective.

However, since

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Technically Speaking: Markets Dismiss Iran As The Fed “Put” Remains

17 days ago

You would think that with the U.S. taking out a top Iranian commander, threats of military action flying between the U.S. and Iran, not to mention the “Selective Service” website crashing over concerns of World War III, the markets would be in full “sell” mode.

Surreal headline pic.twitter.com/lyItw6vD3n
— Hipster (@Hipster_Trader) January 4, 2020

Due to the spread of misinformation, our website is experiencing high traffic volumes at this time. If you are attempting to register or verify registration, please check back later today as we are working to resolve this issue. We appreciate your patience.
— Selective Service (@SSS_gov) January 3, 2020

If you thought that would be the case, you were wrong.
Here is the market from the beginning of the year through yesterday’s close.

The

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The Next Decade: Valuations & The Destiny Of Low Returns

18 days ago

Jani Ziedins via Cracked Market recently penned an interesting post:
“As for what comes next, is this bull market tired? Is a crash long overdue? Not if you look at history. Stocks rallied for nearly 20 years between the early 1980s and the late 1990s. By that measure, we could easily see another decade of strong gains before the next “Big One”. Of course, the worst day in stock market history happened during that 20-year bull market in 1987, so we cannot be complacent. But the prognosis for the next 10 years is still good even if we run into a few 20% corrections along the way.”

After a decade of strong, liquidity-driven, post-crisis returns in the financial markets, investors are hopeful the next decade will deliver the same, or better. As Bob Farrell once quipped:
“Bull markets are

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Market Flat In 2020 As Iran Trips Up Traders

20 days ago

Market Review & Update
MacroView: Is This A Repeat Of 2018?
Sector & Market Analysis
401k Plan Manager

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Catch Up On What You Missed Last Week

Market Review & Update
The first trading day of the year started with a “bang” with the S&P 500 rising more than 20 points. However, the gain was abbreviated on Friday as news shook the market the U.S. had taken out a top Iranian commander in Baghdad. But concerns over potential Iranian conflict quickly abated as the markets returned their focus to the Federal Reserve, and the continued pump of monetary liquidity into the markets. A point noted in our MacroView below.

While the pump of liquidity continues to push asset prices higher, earnings continue to fall. Economic growth

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MacroView: Will The The Market Repeat The Start Of 2018?

21 days ago

“Don’t fight the Fed”
That is the current mantra of the market as we begin 2020, and it certainly seems to be the right call. Over the last few months, the Federal Reserve has continued its “QE-Not QE” operations, which has dramatically expanded its balance sheet. Many argue, rightly, the current monetary interventions by the Fed are technically “Not QE” because they are purchasing Treasury Bills rather than longer-term Treasury Notes.
However, “Mr. Market” doesn’t see it that way. As the old saying goes, “if it looks, walks, and quacks like a duck…it’s a duck.” 

Those liquidity flows most notably have been chasing the largest of large caps – namely Apple (AAPL) and Microsoft (MSFT). As Ed Dowd noted, there are many similarities between now and the last time the Fed was fighting a

Read More »

#WhatYouMissed On RIA: Week Of 12-30-19

21 days ago

This past week was our annual family ski trip, which is why our postings have been lighter than normal this week. We will return next week back with our full schedule.

In the meantime, we know you get busy and don’t check on our website as often as you might like. Plus, with so much content being pushed out every week from the RIA Team, we thought we would send you a weekly synopsis of everything that you might have missed.

The Week In Blogs

The Best Of “The Lance Roberts Show

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Video Of The Week

Thomas Thornton of Hedge Fund Telemetry on the outlook for the market as we head into 2020.

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Our Best Tweets Of The Week

No thanks…I will wait a little bit. 👍🤣😂I know…that must mean I am "bearish" because I am not jumping in with both

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30% Up Years – Should You Sell It?

22 days ago

The bull market turned in an impressive gain of over 30% (on a total return basis) in 2019. While not a rarity in market history, it certainly falls into the “outlier” category. Not surprisingly, the media has been quick to jump on the story suggesting that if 2019 was strong, just wait until 2020. To wit:
“BTIG’s Julian Emanuel believes 2020 will be a milestone year. With the major indexes kicking off Christmas week at fresh all-time highs, he’s not ruling out a 22% surge in the S&P 500. 
The reason: Most investors don’t trust the record rally.”
I am not sure such is the case judging by both our “Smart/Dumb Money” and “Investor Positioning Fear/Greed” indices.

One of the primary tenants of investing, other than “buy low and sell high,” is always analyzing BOTH sides of every argument to

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The Real Investment Guide For The Next Decade

24 days ago

Written by Lance Roberts, Michael Lebowitz, CFA and John Coumarianos, M.S. of Real Investment Advice
As we head into the next decade, this complete set of articles delves into the fallacies of always owning stocks for the long run (aka “buy and hold” and passive strategies). Given that market’s cycle over time, it is important to understand how markets, and investing actually work, the impact on your wealth, and what you can do about it.
This series of articles will cover the following key points:
“Buy and Hold,” and other passive strategies are fine, just not all of the time
Markets go through long periods where investors are losing money or simply getting back to even
The sequence of returns is far more important than the average of returns
“Time horizons” are vastly under-appreciated.

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7-Difficult Trading Rules To Follow In Bull Markets

25 days ago

As we wrap up the last two-trading days of the decade, I am wrapping up the recent series on “investing rules” (see here and here). The purpose of this series is to remind investors of the importance of having an investment discipline to protect investment capital when market volatility eventually comes.
I know…I know…volatility seems to be a thing of the past, particularly given the amount of exuberance currently embedded in the markets. This was a point I made in the most recent newsletter:

I have written many articles previously on investing, portfolio and risk management, and the fallacy of long-term “average” rates of returns. Unfortunately, few heed these warnings until it is generally far too late.
The biggest problems facing investors over the long-term are falling prey to the

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Special Update: Market “Melt Up” Continues

27 days ago

Market Melt Up Continues
Sector & Market Analysis
401k Plan Manager

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Catch Up On What You Missed Last Week

Market “Melt Up” Continues
I am traveling this week with my family for our annual “year-end” ski trip. I am working on a laptop so I won’t be able to update some of the weekly market stat reports, but I did want to pen a few paragraphs on the market as we move into the last two trading days of the decade. I promise the full version of the newsletter will return next week. 
I want to start with the quote from last week’s missive only because it is so apropos: 

“We are so overbought, and this is feeling like a panicky-just-get-me-in buy day. Be careful about being impressed.” – Kevin Muir

That remains the case

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#WhatYouMissed On RIA: Week Of 12-23-19

28 days ago

This past week was our annual family ski trip, which is why our postings have been lighter than normal this week. We will return next week back with our full schedule.

In the meantime, we know you get busy and don’t check on our website as often as you might like. Plus, with so much content being pushed out every week from the RIA Team, we thought we would send you a weekly synopsis of everything that you might have missed.

The Week In Blogs

The Best Of “The Lance Roberts Show

[embedded content]
Video Of The Week

How to add expousre during a market “melt up.”

[embedded content]
Our Best Tweets Of The Week

This article is incorrectly named. Should be "How to invest when you’ve never seen a ‘bear market.’"More advice to people who’ve never been through a "mean

Read More »

7-Simple Investing Rules Your Mother Taught You

29 days ago

When I was growing up my mother had a saying, or an answer, for just about everything…as do most mothers. Every answer to the question “Why?” was immediately met with the most intellectual of answers:
“…because I said so”.
Seriously, my mother was a resource of knowledge that has served me well over the years, and it wasn’t until late in life that I realized that she had taught me the basic principles for staying safe in the investment process.
So, by imparting her secrets to you I may be violating some sacred ritual of motherhood knowledge, but I felt it was worth the risk to share the knowledge which has served me well.
1) Don’t Run With Sharp Objects!
It wasn’t hard to understand why she didn’t want me to run with scissors through the house – I just think I did it early on just to watch

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Market And Investing Wisdoms For 2020

December 23, 2019

Last week, I posted our 2020 Outlook, which focused on the futility of trying to predict the future and the understanding of the current market risks headed into the next decade:
“The reality is that we can’t control outcomes. The most we can do is influence the probability of certain outcomes through the management of risks, and investing based on probabilities, rather than possibilities, which is important to capital preservation and investment success over time.
So, as we head into 2020, here is a short-list of the things we are either currently hedging portfolios against, or will potentially need to:
China fails to comply with the terms of the “Phase One” trade deal, which reignites the trade war.
Earnings growth fails to recover, and valuations finally become a concern for the

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Stocks Vs. Bonds: Why We Own Them & You Should Too

December 23, 2019

Flip on CNBC, pick up a financial paper, or scroll a financial website and you will find a great range of materials discussing the stock market, hot stocks, bad stocks, stock trading tips, and stock investment strategies.
Why? Because stocks are sexy, and the Wall Street casino — with all its flickering lights, screaming patrons, and carnival barkers — makes money for the purveyors of products ranging from IPOs to mutual funds and investment research.
On the other hand, you don’t hear much about bonds. Why? Because bonds are boring? Maybe so. Historically, however, discounting bonds has constituted an investment mistake, and the inevitable cooling down and possible volatility of the stock market in the next decade will make bonds a crucial part of your portfolio.

A recent BNY Mellon

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Market Melts Up As Fed Turns On The Liquidity Firehose

December 21, 2019

Market Melts Up As Fed Turns On Liquidity Firehose
Opportunities In A Melt-Up
2020 – The Futility Of Predictions & Understanding The Risks
Financial Planning Corner
Sector & Market Analysis
401k Plan Manager

Follow Us On: Twitter, Facebook, Linked-In, Sound Cloud, Seeking Alpha

Catch Up On What You Missed Last Week

Market Melts Up

“We are so overbought, and this is feeling like a panicky-just-get-me-in buy day. Be careful about being impressed.” – Kevin Muir

Let me start this week, taking the lead from my dear friend Victor Adair of Polar Futures Group:

“The S&P 500 keep printing new ‘all-time highs’ while complacency reigns even as the CNN Fear & Greed index is flashing extreme greed. Volatility is ultra-low across all markets, the put/call ratio is at a 5 year low and credit

Read More »

2020: The Futility Of Predictions & Understanding The Risk

December 21, 2019

“Predictions Are Difficult…Especially When They Are About The Future” – Niels Bohr
We can’t predict the future. If we could, fortune tellers would win all of the lotteries. They don’t, we can’t, and we are not going to try to.
However, we can analyze what has happened in the past, weed through the noise of the present, and discern the possible outcomes of the future. The biggest problem with Wall Street, both today and in the past, is the consistent disregard of the unexpected and random events they inevitability occur.
There was once a study done of the accuracy of “predictions.” The study took predictions from a broad range of professions from psychics to weathermen. The study came to two conclusions. The first was that “weathermen” are the MOST accurate predictors of the future. The

Read More »

#WhatYouMissed On RIA: Week Of 12-16-19

December 20, 2019

We know you get busy and don’t check on our website as often as you might like. Plus, with so much content being pushed out every week from the RIA Team, we thought we would send you a weekly synopsis of everything that you might have missed.

The Week In Blogs

The Best Of “The Lance Roberts Show”

[embedded content]
Video Of The Week

Michael Lebowitz and I discuss the Fed, what are REPO operations, the markets and the year-end melt up.

[embedded content]
Our Best Tweets Of The Week

Our Latest Newsletter

What You Missed At RIA Pro

RIA Pro is our premium investment analysis, research, and data service. (Click here to try it now and get 30-days free)

See you next week!

Read More »

The Stock Market Has Become A Private Club For The Elite

December 19, 2019

A recent Peter G Peterson Foundation poll, as reported by the Financial Times, revealed a statistic that we have suspected for quite some time. To wit:
“Nearly two-thirds of Americans say this year’s record-setting Wall Street rally has had little or no impact on their personal finances, calling into question whether one of the strongest bull markets in a decade will boost Donald Trump’s re-election chances.
A poll of likely voters for the Financial Times and the Peter G Peterson Foundation found 61-percent of Americans said stock market movements had little or no effect on their financial well-being. 39-percent said stock market performance had a “very strong” or “somewhat strong” impact.
The survey suggested most Americans are not aware of market movements, with just 40-percent of

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