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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

The Biggest Crash In History Is Coming? Kiyosaki Says So.

4 days ago

Robert Kiyosaki recently tweeted, “The best time to prepare for a crash is before the crash. The biggest crash in world history is coming. The good news is the best time to get rich is during a crash. The bad news is the next crash will be a long one.”Is Kiyosaki just being hyperbolic, or should investors prepare for the worst?Importantly, I received Kiyosaki’s comment in an email that I could find out more by just clicking on the link to get a “free” report.I can save you time, and future spam emails, by telling you that Kiyosaki will be correct.Eventually.However, the problem, as always, is “timing.” As discussed previously, going to cash too early can be as detrimental to your financial outcome as the crash itself.Over the past decade, I have met with numerous individuals who “went to

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Investor Sentiment Is So Bearish – It’s Bullish

7 days ago

Investor sentiment has become so bearish that it’s bullish.One of the hardest things to do is go “against” the prevailing bias regarding investing. Such is known as contrarian investing. One of the most famous contrarian investors is Howard Marks, who once stated:“Resisting – and thereby achieving success as a contrarian – isn’t easy. Things combine to make it difficult; including natural herd tendencies and the pain imposed by being out of step, particularly when momentum invariably makes pro-cyclical actions look correct for a while.Given the uncertain nature of the future, and thus the difficulty of being confident your position is the right one – especially as price moves against you – it’s challenging to be a lonely contrarian.”Currently, everyone is bearish. As noted in “Stock Market

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Buy And Hold Investing. Is It A One Size Fits All Solution?

11 days ago

“Buy and hold” investing. Is it truly a “one size fits all solution” to the investing conundrum? Or are there other considerations that would make such a solution less optimal?I ask the question due to an email I received recently from one of the large Wall Street firms.“Despite the tumble to begin this year, investors should not panic. Over the long-term course of the markets, investors who have remained patient have been rewarded. Since 1900, the average return to investors has been almost 10% annually…our advice is to remain invested, avoid making drastic movements in your portfolio, and ignore the volatility.”As shown in the chart below, the advice given is not entirely wrong. Since 1900, the markets have averaged roughly 10% annually (including dividends). However, that figure falls

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“Don’t Be Bearish.” The Inevitable End Of Bad Advice.

14 days ago

Originally Published At Epoch Times“Don’t be bearish.” That was the message delivered by a Wall Street Journal article in August 2021, discussing the “new generation” of “financial media stars.” To wit:“As the U.S. retreated amid the pandemic to its couches, millions of would-be stock pickers—some flush with stimulus cash—fired up social-media and messaging apps and dove headlong into the world of retail investing.Many of these influencers have no formal training as financial advisers and no background in professional investing, leading them to pick stocks based on the whims of popular opinion or to dispense money-losing advice.”Since young investors wanted a “quick and easy” roadmap to make “big profits,” these online “stars” doling out free advice was the perfect source.However, such

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Buying Stocks Is Easy, Selling Is The Hard: 7 Rules to Manage Risk

18 days ago

Buying stocks is easy; the hard part is knowing when to sell. I read an excellent article recently by Michael Batnick on his trials and tribulations in owning a stock. To wit:“Now let’s talk about a company that I did care enough about to buy and lost money on. What do you call a stock that was down 58% and then fell 27% in a day? Zillow.”The primary tenant of investing is that if you are going to put capital at “risk” in a “speculative transaction,” be prepared to lose. We have all been there.However, where I partially disagree with Michael’s analysis is this:“‘Buy low, sell high’ is one of the most garbage pieces of financial ‘wisdom.’ Most of the time when you buy low, you end up selling lower. Jon Boorman taught me this a long time ago but sometimes you have to relearn what you already

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Bull Market In Bonds Set To Return With A Vengeance

21 days ago

A bull market in bonds is set to return with a vengeance as the Fed once again makes a policy mistake.I recently discussed the surge in bond yields noting that such events have previously led to more unwelcome market and economic outcomes.“As shown below, the surge in 2-year bond yields is unprecedented. Historically, such a surge in short-term yields coincides with either recessions or market events. With yields now 4-standard deviations above their 52-week moving average, such has traditionally denoted peaks in yields previously.”The chart is updated to current yield levels.What is important about the 2-year treasury yield is that it maintains a very high correlation to the Fed funds rates. As shown below, the current surge in the 2-year yield is leading the Federal Reserve rate

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Recession Warnings Rise, Limiting Fed’s Inflation Fight

22 days ago

Recession warnings are clearly on the rise. Much of the initial media fervor focuses on the inversion of the yield curve.The 2-year and 10-year Treasury yields inverted for the first time since 2019 on Thursday, sending a possible warning signal that a recession could be on the horizon.” – CNBCOf course, investors, analysts, and economists continue to debate the meaning of the 2-year/10-year yield-curve inversion. Since 1978, yield curve inversions consistently provide recession warnings.Most of the yield spreads we monitor, shown below, have yet to invert. However, the best signals of a recessionary onset occur when 50% of the 10-yield spreads that we track turn negative simultaneously. Notably, it is always several months before the economy slips into recession and even longer before the

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7 Rules For Long-Term Investing Success

25 days ago

Long-term investing requires some basic rules to avoid pitfalls along the way. If investing money worked as the mainstream media suggests, then why, after three of the most significant bull markets in history, are 80% of Americans so woefully unprepared for retirement?“The crucial point to understand when investing money is the financial market will do one of two things to your financial future.”If you treat the financial markets as a tool to adjust your current savings for inflation over time, the markets will KEEP you wealthy. However, if you try and use the markets to MAKE you wealthy, your capital will shift to those in the first category.Many believe that investing in the financial markets is their only option for retiring. Unfortunately, they have fallen into the same trap as most

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Is A Bear Market Lurking?

28 days ago

Is there a bear market lurking in the shadows?Such seems to be the question everyone is asking me as of late. Over the last couple of weeks, we have reviewed the bullish and bearish cases for the market.In those discussions, I tried to balance the bullish and bearish arguments into some actionable strategies over the next few weeks. The purpose of analyzing both views is to minimize confirmation bias, which can negatively impact portfolios over time.“When investors seek out information that confirms their existing opinions and ignore facts or data that refutes them, such may skew the value of their decisions based on their own cognitive biases. This psychological phenomenon occurs when investors filter out potentially useful facts and opinions that don’t coincide with their preconceived

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How to Invest Your Money Wisely – 14 Truths You Need to Know

29 days ago

How does investing, and money in general, actually work? Such is a question often answered with simplistic suggestions that are difficult, if not ultimately impossible, for individuals to follow.However, if investing money worked as the mainstream media suggests, then why after three of the most significant bull markets in history are 80% of Americans so woefully unprepared for retirement.The crucial point to understand when investing money is this: the financial market will do one of two things to your financial future.If you treat the financial markets as a tool to adjust your current savings for inflation over time, the markets will KEEP you wealthy. However, if you try and use the markets to MAKE you wealthy, your capital will be shifted to those in the first category.Let’s focus on

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Still A Bear Market Rally? Or, Is The Bull Back?

April 12, 2022

Is it still a “bear market rally?” After a big surge from the lows following the Russian invasion of Ukraine, Mike Wilson from Morgan Stanley thinks so. To wit:“The first quarter was one of the worst on record for the collective performance of stocks and bonds, with the latter worse than the former. This makes sense given that investor concern focused more on the ‘Fire’ (inflation and the Fed) than the ‘Ice’ (growth slowdown). However, that leaves us more constructive on bonds than stocks over the near term as growth concerns take center stage – hence our doubling down on a defensive bias.The rally was predictable from a technical perspective, but it was always a bear market rally in our view, and now we think the bear market rally is over.” – Morgan StanleyThere are certainly some

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Wisdom Of Crowds Isn’t Always Wise To Follow

April 11, 2022

Originally published at Epoch Times.The “wisdom of the crowd” isn’t always wise to follow. A recent article by Scott Nations via MarketWatch made an excellent point.“It’s easy to become anxious as an investor.  It’s particularly easy to become anxious when war is erupting in Europe, stock markets are gyrating, inflation is spiking, and the Federal Reserve is raising interest rates to snuff out that inflation. So what do many investors do in times like this?  While we like to think that we’ll be rugged individualists and go our own way, too often we reflexively look around to see what everyone else, the great lowing herd of investors, is doing.  And then many of us will join that herd.”What is herding?“The term herd instinct refers to a phenomenon where people join groups and follow the

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SimpleVisor Upgrades 04-09-2022

April 9, 2022

In our ongoing efforts to continually upgrade and improve SimpleVisor for you, the following changes are now complete.The backend has been upgraded with the latest backend python libraries and databases. There are no visible changes, but it makes the front user experience smooth with faster execution of complex calculations. Major Features: Strategy Builder and Strategy Ideas. (BETA TEST)Single stock or ETF strategy ideas can be built and saved by Lance and Mike for users to start exploring and experimenting with popular trading strategies. We only have a few indicators at the moment, but will be adding many more to pick and choose from very soon.Users can make their own strategies with available indicators by mixing and matching buy and sell conditions. Users of strategy builders can test

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Goldman Sachs Destroys An Investing Myth?

April 8, 2022

Did Goldman Sachs destroy a persistent myth about investing in stocks? Sam Ro recently suggested such was the case for the “sacred CAPE ratio.”So, what is the persistent myth that is no more?“While valuations feature importantly in our toolbox to estimate forward equity returns, we should dispel an oft-repeated myth that equity valuations are mean-reverting.” – Goldman SachsAs Sam notes in his commentary,“Many market watchers use above-average CAPE readings as a signal that stocks should underperform or even fall as it reverts back to its long-term mean. But CAPE’s mean doesn’t actually have much pull.“However, here is the key sentence from Goldman’s analysis.“We have not found any statistical evidence of mean reversion,” the Goldman Sachs analysts wrote. “Equity valuations are a bounded

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Bullish Or Bearish: Where Are We Now?

April 5, 2022

Bullish or bearish? What is the case for the market now?As we noted previously, having a proper market perspective is essential in avoiding investing mistakes over time. However, another trap we potentially fall into is “confirmation bias,”“Experts in the field of behavioral finance find that confirmation bias applies to investors in notable ways. Because investors seek out information that confirms their existing opinions and ignore facts or data that refutes them, they may skew the value of their decisions based on their own cognitive biases. This psychological phenomenon occurs when investors filter out potentially useful facts and opinions that don’t coincide with their preconceived notions.” – InvestopediaWith the Russia/Ukraine conflict raging, energy prices soaring, inflation

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Bear Market Anatomy – Revisiting Russell Napier’s Work (Annotated)

April 4, 2022

“Anatomy of a Bear Market” by Russell Napier is a “must-read” manuscript. Given current market dynamics, a review seems timely. As my colleague, Richard Rosso, CFP, previously penned:“A mandatory study for every financial professional and investor who seeks to understand not only how damaging bear markets can be but also the traits which mark their bottoms.Every bear awakes from hibernation for different reasons. However, when studying the four great bottoms of bears in 1921, 1932, 1949, and 1982, there are several common traits to these horrendous cycles.”Not surprisingly, after 12-years of Fed interventions, seemingly impenetrable markets, and low yields, investors have become overly complacent. Such is despite repeated warnings to the contrary,“Every financial crisis, market upheaval,

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Yield Curve Inversions & Media’s Denial Of History

April 1, 2022

Yield curve inversion conversations are dominating the media to the point it almost sounds like the start of a bad joke.“A yield curve inversion walks into a bar. The bartender asks ‘hey, what’s got you down?’”The conversations are primarily dismissive under the “this time is different” scenario. As noted by Yahoo Finance last week:“Take a look at the August 2019 inversion. A recession did happen a year and a half later. But it was triggered by a global pandemic — something bond markets could not have possibly foreseen or predicted.”That isn’t accurate as the recession occurred only 6-months later. Furthermore, the bond market did know there was something very wrong economically as the Fed was engaged in a massive repurchase operation to bail out hedge funds.As we noted then, all that was

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Bear Squeeze? Or, Return Of The Bull?

March 29, 2022

“Bear squeeze,” or has the bull market returned? Over the last few weeks, that remains the question as the market rocketed off its lows, eclipsing both the 50- and 200-day moving averages. But is it safe to chase the markets higher?As we discussed recently, the best 10-days of the market tend to be during the worst periods.“The firm noted this eye-popping stat while urging investors to ‘avoid panic selling,’ pointing out that the ‘best days generally follow the worst days for stocks.’” – Pippa Stevens via CNBCThink about that for a moment“The best days generally follow the worst days.“The statement is correct, as the S&P 500’s most significant percentage gain days tend to occur in clusters during the worst of times for investors.The reason that markets tend to surge during market selloffs

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Bailouts And The Demise Of Capitalism And Free Markets

March 28, 2022

Bailouts are the root cause of the dysfunction of capitalism and the demise of free markets.Over the last decade, the rise of wealth inequality and the failure of markets to function in a “fair manner” is apparent. We can directly attribute it to the influence of Central Banks and Governments.We talk much about the bailouts and stimulus programs related to the economic shutdown and pandemic. However, the bailouts began back in 2008 when the Federal Reserve intervened with the insolvency of Bear Stearns.While these massive infusions kept the economy “afloat,” the realization of inequities between the financial system and everyone else led to a significant increase in social unrest. As shown by household net worth, such was the inevitable outcome as the wealth gap between the top 10% and the

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Surge In Bond Yields Says It’s Time To Buy Bonds

March 25, 2022

The surge in bond yields suggests that we are nearing the ideal entry point to buy longer-duration bonds for capital appreciation and portfolio protection.Such isn’t the first time we have made this call.In December 2018, we wrote why Jeff Gundlach was likely incorrect about bond yields topping 6%. Here is the conclusion to that article.“Currently, interest rates are at a level that has historically led to some sort of event. Whether it was economic, financial, or both, there is no real precedent that suggests rates could rise another 3% from here without severe ramifications. Of course, as the market declines, the demand for “safety” would ultimately push rates lower.At some point, the Federal Reserve is going to step back in and reverse their policy back to “Quantitative Easing” and

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“BTFD” or “STFR” – Which Is It?

March 22, 2022

“BTFD” (Buy The F***ing Dip) or “STFR” (Sell The F***ing Rally) – which should investors do now?With the Fed now hiking rates, seemingly intent on doing so at every meeting in 2022, has the correction priced in the “bad news?”The issue, of course, is that we never know for sure where we are within the current cycle until it is often far too late. An excellent example of this is 2008, as I discussed recently in “Recession Risk.”“The problem with making an assessment about the state of the economy today, based on current data points, is that these numbers are only ‘best guesses.’ Economic data is subject to substantive negative revisions as data gets collected and adjusted over the forthcoming 12- and 36-months. Consider for a minute that in January 2008 Chairman Bernanke stated:‘The Federal

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Is Cash Trash As Inflation Rages?

March 21, 2022

“Cash Is Trash” is a common theme as of late as inflation rages from the massive monetary interventions of 2020 and 2021. However, is “cash really trash?” Or, does cash still provide a valuable benefit to portfolios in terms of risk management?One of the common mistakes that individuals make regarding inflation is to assume that current inflationary pressures are now permanent. As shown below, while bouts of inflation can last for extended periods, it is never permanent. Notably, periods of “spiking” inflation lead to recessions and deflation, as consumption contracts and economic growth slows.In the 60s-70s, rising inflation got offset by high savings rates, strong economic growth, and low household leverage. The current bout of inflation is the direct result of monetary interventions

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Recession Risk: Rising Rapidly (Or, Could We Be In One Already?)

March 18, 2022

Recession risk is rising rapidly. In fact, it is possible that we may already be in one.While such a claim may sound impossible, given that Q4-GDP was above 5% in terms of annualized growth, such would not be the first time such a turn occurred.As I discussed in “Shortest Recession In History,” the 2020 recession lasted just two months. However, during those two months, the economy fell by 31.4% (GDP), and the financial markets plunged by 33%. Both of those declines, as shown in the table below, are within historical norms.Here it is graphically. The chart shows the historical length of each recession and the corresponding market decline.However, while the effects of the “recession” were all within historical norms, the recession itself was not. As the National Bureau Of Economic Research

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Market Perspective Is Important To Avoid Mistakes

March 15, 2022

Market perspective is essential in avoiding investing mistakes. With CNBC airing “Markets In Turmoil” every time the market dips, it’s no wonder investor sentiment is now the lowest we have seen financial crisis lows.

Of course, as shown, extremely negative investor sentiment tends to be the hallmark of the bottom of corrections and bear markets.

Nonetheless, now that we are connected constantly to financial media, we are inundated with headlines designed to get “clicks” more than delivering real news. As we discussed in “Investor Resolutions For 2022,” the biggest driver of investing failure over time is psychology.

“The investor’s chief problem – and even his worst enemy – is likely to be himself.” – Benjamin Graham.

The Anchoring Problem

“Anchoring is a heuristic

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Fed’s QE Is Over (Until It Comes Back.)

March 14, 2022

The Fed’s QE is officially over. As we noted in our recent Daily Market Commentary (subscribe for a pre-market email):

“The Fed will officially end the latest round of QE on Wednesday. The schedule below shows that on March 9th, the Fed will make its last QE purchase of about $4 billion of shorter-term Treasury notes. Since March 2020, the Fed’s balance sheet has risen by nearly $5 trillion due to QE. The Fed will still purchase bonds but only to offset maturing bonds and keep its balance sheet stable. Given the new monetary policy regime, we must focus beyond the Russian conflict. This entails better risk management as a key source of liquidity is now officially ending.”

Why is this important?

As we discussed in “Don’t Fight The Fed,” the Fed’s QE has been the primary driver of

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Oil Spikes And Economic Outcomes

March 11, 2022

Oil spikes have historically negatively impacted economic outcomes. As the chart below shows, oil spikes typically are short-lived due to some exogenous geopolitical event. However, as was the case from 2003-2008, fundamental concerns, in this case, the fear of “peak oil,” can lead to more extended periods of higher prices.

The chart shows the inflation-adjusted price of oil since 1960.

While higher oil prices certainly benefit oil companies by making the extraction process more profitable, there is also a negative impact on the economy.

“High oil prices add to the costs of doing business. And these costs are area also ultimately passed on to customers and businesses. Whether it is higher cab fares, more expensive airline tickets, the cost of apples shipped from California, or

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An Earnings Reversion Is Coming

March 8, 2022

An earnings reversion is coming.

In “earnings estimates will disappoint,” we showed the extreme bullishness of estimates entering 2022.

“Despite economic growth weakening as inflation increases, liquidity reducing, and profit margins under pressure, analysts continue increasing their earnings estimates. Currently, estimates for the Q4-2022 are $219.87/share according to S&P, up from $207/share at the end of 2021. As shown, that level will exceed the historical 6% exponential growth trend, which contained earnings growth since 1950, by the most significant deviation ever.“

The only two previous periods with similar deviations are the “Financial Crisis” and the “Dot.com” bubble.

With analysts extremely exuberant, there seems to be little concern for investors. However, I would

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No. Greedy Corporations Aren’t Causing Inflation

March 7, 2022

Greedy corporations are not causing inflation. Such is despite the claims of many of those on the political left that failed to understand the very basics of economic supply and demand.

Here is the basic argument by those pushing for a more socialistic agenda:

“Greedy corporations are causing inflation by jacking up prices and enjoying record profits.”

Elizabeth Warren is pushing this particular narrative very hard.

For the majority of Americans who now get their “news” from social media, the uneducated masses now have a new target of hatred for their financial woes.

The problem, as with many of the narratives ramping up the ire of Americans on social media, is it is patently false.

As Michael Maharrey recently penned:

“One simply has to reason through the claim to

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Hiking Rates Into Peak Valuations Is A Mistake

March 4, 2022

Hiking rates into a wildly overvalued market is potentially a mistake. So says Bank of America in a recent article.

Optimists expecting the stock market to weather the rate-hike cycle as they’ve done in the past are missing one important detail, according to Bank of America Corp.’s strategists.While U.S. equities saw positive returns during previous periods of rate increases, the key risk this time round is that the Federal Reserve will be “tightening into an overvalued market,” the strategists led by Savita Subramanian wrote in a note.“The S&P 500 is more expensive ahead of the first rate hike than any other cycle besides 1999-00,” they said.” – Yahoo Finance

While many media experts suggest that investors should not be concerned about rate hikes, BofA makes a very valid point

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Sell Energy Stocks? The Time May Be Approaching

March 1, 2022

“Sell Energy Stocks” Was Originally Published At Marketwatch.com

Sell energy stocks? Such certainly seems counter-intuitive advice given high oil prices, geopolitical stress, and surging inflation. However, some issues suggest this could indeed be the time to “sell high.”

Before we go further, it is essential to state that I am not recommending selling energy stocks in total. As is always the case, portfolio management is about minimizing risk and preserving capital. Reducing energy exposure by selling portions of existing positions is more prudent.

As shown, there is a high correlation between the price of oil, the energy sector as represented by SPDR Energy ETF (XLE,) and even oil stocks like Exxon Mobil (XOM.) Therefore, if oil prices decline, energy stocks will also.

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