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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

Fundamentally Speaking: 7-Measures Suggest A Decade Of Low Returns

2 days ago

“Price is what you pay, value is what you get.” – Warren Buffett
Just recently, I discussed the importance of valuations as it relates to investors who are close to retirement age. To wit:
“Unless you have contracted ‘vampirism,’ then you do NOT have 90, 100, or more, years to invest to gain ‘average historical returns.’ Given that most investors do not start seriously saving for retirement until the age of 35, or older, they have about 30-35 years to reach their goals. If that period happens to include a 12-15 year period in which returns are flat, as history tells us is probable, then the odds of achieving their goals are severely diminished.
What drives those 12-15 year periods of flat to little return? Valuations.”
Despite commentary to the contrary, the evidence is quite unarguable.

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The 5-Laws Of Human Stupidity & How To Be A “Non-Stupid” Investor

3 days ago

This past weekend, I was digging through some old articles and ran across one that needed to be readdressed on “human stupidity” as it relates to investing.
The background was a study done in 1976 by a professor of economic history at the University of California, Berkeley. Carol M. Cipolla published an essay outlining the fundamental laws of a force he perceived as humanity’s greatest existential threat: Stupidity.
Stupid people, according to Cipolla, share several identifying traits:
they are abundant,
they are irrational, and;
they cause problems for others without apparent benefit to themselves
The result is that “stupidity” lowers society’s total well-being and there are no defenses against stupidity. According to Cipolla:

“The only way a society can avoid being crushed by the burden

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The Bulls Are Betting On A “Long Shot” 05-17-19

5 days ago

Market Review & Update
Bulls Are Betting On A “Long Shot”
Sector & Market Analysis
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Market Review & Update
Over the last several weeks, we have been discussing the potential for a market correction simply due to divergences in the technical indicators which suggested near-term market risk outweighed the reward. Then, the White House reignited the “trade war” with China. To wit:

“The “Trade War” is not a good thing for markets or the economy as recently suggested by the President. David Rosenberg had an interesting point on this as well on Friday:
‘Tracing through the GDP hit from a tariff war on EPS growth and P/E multiple compressions from heightened uncertainty, the downside impact on the S&P 500

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The Run For The Roses

6 days ago

The recent running of the Kentucky Derby marks the time of year of horse racing’s prestigious Triple Crown and everything that goes along with it. Temperate spring weather, increasingly beautiful spring foliage, ostentatious hats, parties, and of course, the impressive physical prowess of the horses and the jockeys are all part of the season.
It is also a reminder of another race that has been going on, albeit with considerably less pageantry: The race to fund pension plans. This is a different kind of race because it is ongoing and because there aren’t distinct winners. There definitely are losers, however. It is also a race that has driven considerable interest in risky assets such as stocks and private equity.
In a sense, investors are accustomed to racing because it is something of a

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Strike Three: The Next Bear Market Ends The Game

7 days ago

At the beginning of this year, I was at dinner with my wife. Sitting at the table next to us, was a young financial advisor, who was probably in his mid-30’s, meeting with his client who appeared to be in his 60’s. Of course, the market had just experienced a 20% correction from the previous peak and the client was obviously concerned about his portfolio.
“Don’t worry, there is always volatility in the market, but as you can see, even bear markets are mild and on average the market returns 8% a year over the long-term.” 
Here is the chart which shows the PERCENTAGE return of each bull and bear market going back to 1900. (The chart is the S&P 500 Total Return Inflation-Adjusted index.)

Here is the narrative used with this chart.
“The average bear market lasts 1.4 years on average and falls

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Technically Speaking: The Drums Of Trade War – Part Deux

9 days ago

In June of 2018, as the initial rounds of the “Trade War” were heating up, I wrote:
“Next week, the Trump Administration will announce $50 billion in ‘tariffs’ on Chinese products. The trade war remains a risk to the markets in the short-term.”
Of course, 2018 turned out to be a volatile year for investors which ended in the sell-off into Christmas Eve.
As we have been writing for the last couple of weeks, the risks to the market have risen markedly as we head into the summer months.
“It is a rare occasion when the markets don’t have a significant intra-year correction. But it is a rarer event not to have a correction in a year where extreme deviations from long-term moving averages occur early in the year. Currently, the market is nearly 6% above its 200-dma. As noted, such deviations

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Valuations, Returns & The Real Value Of Cash

10 days ago

Since the beginning of 2019, the market has risen sharply. That increase was not due to rising earnings and revenues, which have weakened, but rather from multiple expansion. In other words, investors are willing to pay higher prices for weaker earnings.
The issue, of course, is that while it may not seem to matter in the short-term, valuations matter a lot in the long-run.
I know what you are thinking.
“There is NO WAY cash will outperform stocks over the next decade.” 
I understand. After a decade-long market advance, it’s hard to fathom a period where stocks fail to perform. However, despite what you have been told, this time is not different, valuations do matter, and “no,” Central Banks do not have it all under control. (In reality, the Federal Reserve are the “Firemen” in Fahrenheit

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Game Of Thrones: Winter Is Coming 05-10-19

12 days ago

Market Review & Update
Game Of Thrones
Sector & Market Analysis
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Market Review & Update
As we discussed last Saturday it was important for the markets to hold within to consolidation band, or break out to the upside, if the bulls were going to maintain control of prices in the short-term. The return of “Tariff Man” put the markets back on edge. 
As I noted then:

“The market’s stellar run is set for a breather over the next couple of months. Specifically, as we approach the end of the seasonally strong period, the odds of a ‘reset’ rise markedly.”

I also discussed our portfolio actions with respect to our clients:

“This brings me to what we did with our equity portfolios last Tuesday and

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What Could Go Wrong? The Fed’s Warns On Corporate Debt

14 days ago

“So, if the housing market isn’t going to affect the economy, and low interest rates are now a permanent fixture in our society, and there is NO risk in doing anything because we can financially engineer our way out it – then why are all these companies building up departments betting on what could be the biggest crash the world has ever seen?
What is more evident is what isn’t being said. Banks aren’t saying “we are gearing up just in case something bad happens.” Quite the contrary – they are gearing up for WHEN it happens.
When the turn does come, it will be unlike anything we have ever seen before. The scale of it could be considerable because of the size of some of these leveraged deals.” – Lance Roberts, June 2007
It is often said that no one saw the crash coming. Many did, but since

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3-Ways To Be Your Own Financial “Superhero”

15 days ago

The latest in the Marvel movie portfolio – Avengers: Endgame has blown away every theatre attendance record. The film has earned $1.48 billion on a global level (as of this writing).  
There’s little doubt that humans love heroes, especially super-human types. We relish the conflict between good and evil. We cry when our heroes face setbacks and applaud when they gain the upper hand on the enemies because if we were superheroes, we’d fight dark forces and win, too.
We also get a bit overzealous and scream “take our money!” when our Avengers with all their special talents, are also all too human. They love, feel loss deeply, they’re sort of funny, seek revenge and as passionately overcome obstacles to right the wrongs which hurt their own and innocent people.
To become a financial

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Technically Speaking: “‘Trade War’ In May & Go Away.”

16 days ago

Over the weekend, President Trump decided to reignite the “trade war” with China with two incendiary tweets. Via WSJ:
“In a pair of Twitter messages Sunday, Mr. Trump wrote he planned to raise levies on $200 billion in Chinese imports to 25% starting Friday, from 10% currently. He also wrote he would impose 25% tariffs ‘shortly’ on $325 billion in Chinese goods that haven’t yet been taxed.
‘The Trade Deal with China continues, but too slowly, as they attempt to renegotiate,’ the president tweeted. ‘No!’”
This is an interesting turn of events and shows how President Trump has used the markets to his favor.
In January of 2018, the Fed was hiking rates and beginning to reduce their balance sheet but markets were ramping higher on the back of freshly passed tax reform. As Trump’s approval

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Has The Fed Done It? No More Recessions?

17 days ago

That is all I could utter as my brain spun listening to an interview with Chamrath Palihapitiya on CNBC last week.
“I don’t see a world in which we have any form of meaningful contraction nor any form of meaningful expansion. We have completely taken away the toolkit of how normal economies should work when we started with QE. I mean, the odds that there’s a recession anymore in any Western country of the world is almost next to impossible now, save a complete financial externality that we can’t forecast.”
It is a fascinating comment particularly at a time where the Federal Reserve has tried, unsuccessfully, to normalize monetary policy by raising interest rates and reducing their balance sheet.  However, an almost immediate upheaval in the economy, not to mention reprisal from the

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Never Hurts To Ring The Cash Register 05-03-19

19 days ago

Market Update & Review
Never Hurts To Ring The Cash Register
Portfolio Management Guidelines
Sector & Market Analysis
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Market Update & Review
Fortunately, the market rallied on Friday as traders scrambled to hold important support levels following confirmation from Richard Clarida that the Fed has no intention of moving interest rates anytime soon. Via Bloomberg:
Despite headlines to the contrary, the employment

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The Great Stock Buyback Debate

21 days ago

I recently wrote about stock buybacks in our weekly newsletter. However, a recent report from Axios noted that for 2019, IT companies are again on pace to spend the most on stock buybacks this year, as the total looks set to pass 2018’s $1.085 trillion record total.

“By the numbers: Companies so far have spent $272 billion on buybacks, data compiled by Mike Schoonover, COO of Catalyst Funds, for Axios shows.
Between the lines: The amount of spending on buybacks announced by companies in the IT sector has fallen significantly this year as other industries, particularly energy and industrials, have picked up the slack. Companies in those sectors have about doubled their percentage of announced buybacks.
The top 5 sectors for buybacks this year accounted for 76% of the total. Last year, the

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Technically Speaking: A Warning About Chasing This Bull Market

23 days ago

This past weekend, we discussed the breakout of the markets to all-time highs.
The question I asked this past weekend was simply;
“The bull market is back, but can it stay?”
When I was growing up my father, probably much like yours, had pearls of wisdom that he would drop along the way. It wasn’t until much later in life that I learned that such knowledge did not come from books, but through experience. One of my favorite pieces of “wisdom” was:
“Exactly how many warnings do need before you figure out that something bad is about to happen?”
Of course, back then, he was mostly referring to warnings he issued for me “not” to do something I was determined to do. Generally, it involved something like jumping off the roof with a queen-sized bedsheet convinced it was a parachute.
My argument was

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Boomers Are Facing A Financial Crisis

24 days ago

The rest will be faced with tough decisions in the years ahead.
The good news is that if Alexandria Ocasio-Cortez is correct, none of this will be a problem if climate change kills everyone in the next 12 years.

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The Bull Is Back…But Will It Stay? 04-26-19

26 days ago

Oh…you are just being bearish.

Maybe, but as I stated in Q2 of 2018:

“The deterioration in earnings is something worth watching closely. While earnings have improved in the recent quarter, due to the benefit of tax cuts, it is likely transient given the late stage of the current economic cycle, continued strength in the dollar and potentially weaker commodity prices in the future. Wall Street is notorious for missing the major turning of the markets and leaving investors scrambling for the exits.

Of course, no one on Wall Street told you to be wary of the markets in 2018. While we did, it largely fell on deaf ears.
Currently, there is “no perceived risk” in the markets as represented by the second highest levels of VIX shorts on record.

However, “risk” is like grabbing the tail of a

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Eternal Bullishness & Willful Blindness

28 days ago

The S&P 500 and Nasdaq Composite had their highest closings on record Tuesday, regaining ground lost in last year’s rout. Stocks have flourished under a more accommodative Federal Reserve. In January, the central bank said it would hold interest rates steady, setting in motion the stock market’s strongest first-quarter run in more than two decades, as investors dialed back up their appetite for riskier assets like stocks.
On Tuesday, the stock market hit all-time highs. 
Such should not be surprising given the rally particularly in the very heavily weighted Technology sector (XLK) and something I penned several weeks ago for our RIA PRO subscribers: (Get a 30-day FREE trial)
Currently XLK is on a “Buy” signal (bottom panel) but that signal is “crazy” extended.
However, the good news is

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Technically Speaking: Running On Empty

April 23, 2019

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Running On Empty
“Running On Empty” was an iconic song about life on the road as a traveling musician. The 1977 live recording, which became a 1978 hit for Jackson Browne, is considered one of true representatives of Heartland Rock, and a concert favorite.
When Jackson Browne was interviewed about the song by Rolling Stone Magazine, at the time he was recording the album “The Pretender” he said:
I was always driving around with no gas in the car. I just never bothered to fill up the tank because — how far was it anyway? Just a few blocks.
“Running on, running on emptyRunning on, running blindRunning on, running into the sunBut I’m running behind”
Those lyrics are not so far and apart from where we are in the markets today.

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Auto Sales Aren’t Nearly As Strong As Reported

April 22, 2019

Steve Goldstein recently reported for MarketWatch that closely watched auto sales were leading economists to be more confident in their economic outlook for the rest of the year. To wit:
“Motor vehicle sales reached a seasonally adjusted annual rate of 17.45 million in March, up from 16.57 million in February, according to data from Autodata. That’s the highest reading in three months and represents a recovery from a downbeat start to the year. The MarketWatch-compiled consensus expectation was for a 16.8 million rate.”

Jim O’Sullivan of High-Frequency Economics also made a similar point.
“The data reinforce our view that the slowing in retail sales through February was exaggerated.”
Of course, the March retail sales report out last week was led primarily by a pickup in auto sales as well

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The Fear Of Missing Out (FOMO): 04-19-19

April 20, 2019

The Lesson Of Easter
The Fear Of Missing Out (FOMO)
Sector & Market Analysis
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The Lesson Of Easter
Last night, I took my family to dinner, and my son asked me:

“Dad, every year we go to church on Easter Sunday and they have the same sermon every year.”

He’s right. I can almost recite verbatim the sermon we will sit through on Sunday morning. However, my answer back to him made him understand the lesson he was supposed to be learning. 
Since he is currently reading George Orwell’s 1984, it reminded me of an important line in that novel.

“The real secret of class distinctions in the West can be

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Reality Vs Fantasy: What To Watch For This Earnings Season

April 18, 2019

Just recently, David Robertson ran an article discussing the deviation which has grown between “fantasy” and “reality” in the investing markets.
“The phenomenon of extreme differences is also increasingly appearing in financial numbers, which are the life blood of markets. Andrew Smithers conducted research on the usefulness of accounting numbers and his work was summarized by Jonathan Ford. 
‘Corporate data now provide worse information than before.’
The ironic consequence of all this is that investors increasingly rely on non-Gaap numbers for valuation. These are not only idiosyncratic, and thus not always capable of comparison, they are also devised by bosses whose views may well be richly coloured by their own outsize incentives.’
Henny Sender highlights some prominent examples

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Technically Speaking: Drive For Show

April 16, 2019

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Drive For Show
In golf there is an old axiom:
“Drive for show. Putt for dough.” 
This past weekend, Tiger Woods completed a comeback on Sunday by capturing his fifth Master’s title and his 15th major tournament win. It was a victory that snapped a decade-long championship drought and instantly returned him to the top of the sports world.
While his drives were some of the best on display, it was his final two-putt, likely the greatest bogey of his career, which put him 13-under par clinching the title.
Yes, Tiger Woods is back at “all-time” highs.
However, Tiger Woods’ journey back to the peak of the golfing

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The Market’s Misread Of The Fed’s Minutes

April 15, 2019

Last week, the Federal Reserve released their March FOMC meeting minutes. Following the release, the markets surged higher as the initial reading by the markets was “the Fed is done hiking rates.” As the Wall Street Journal reported in Fed Minutes: Officials See Little Need to Change Rates This Year.

‘Minutes of the March meeting released Wednesday showed officials see little reason to continue raising rates due to greater risks to the U.S. economy from the global growth slowdown and muted inflation readings that took more officials by surprise.
‘A majority of participants expected that the evolution of the economic outlook and risks to the outlook would likely warrant leaving the target range unchanged for the remainder of the year,’ the minutes said.
At the same time, the minutes show

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Make Stock Buybacks Illegal? 04-13-19

April 13, 2019

Market Review – Market Climbs Above 2900
Make Stock Buybacks Illegal?
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Markets Climb Above 2900, All-Time Highs Next Stop?
Over the last couple of weeks, we have been discussing the market’s advance from the lows and why retesting old highs was quite probable. To wit:

“The markets are close to registering a ‘golden cross.’ This is some of that technical ‘voodoo’ where the 50-day moving average (dma) crosses above the longer-term 200-dma. This ‘cross’ provides substantial support for stocks at that level and limits downside risk to some degree in the

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The Myths Of Stocks For The Long Run – Part XII

April 11, 2019

Written by Lance Roberts and Michael Lebowitz, CFA of Real Investment Advice
CHAPTER 12 – 181 Lines of Wisdom
Over the last 30-years, I have endeavored to learn from my own mistakes and, trust me, I have paid plenty of “stupid-tax” along the way. However, it is only from making mistakes, that we learn how to become a better investor, advisor or portfolio manager.
You have now read our opinions on buy and hold. Before we conclude we thought you should hear the views of investing legends.
The following is a listing of investing tips, axioms and market wisdom from some of the great investors of our time. Importantly, as you review this invaluable knowlege, compare how these investing legends approach investing as compared to your methodologies, those of your advisor, or what you are told

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Fundamentally Speaking: Earnings Growth Much Weaker Than Advertised

April 9, 2019

With analysts once again hoping for a surge in earnings in the months ahead, along with an economic revival, it is worth noting this has always been the case. Currently, there are few, if any, Wall Street analysts expecting a recession currently, and many are certain of a forthcoming economic growth cycle. Yet, at this time, there are few catalysts supportive of such a resurgence.
The Fed isn’t hiking rates, but they aren’t reducing them either.
The Fed isn’t reducing their balance sheet any more after September, but they aren’t increasing it either.
Economic growth outside of China remains weak
Employment growth is going to slow.
There is no massive disaster currently to spur a surge in government spending and reconstruction.
There isn’t another stimulus package like tax cuts to fuel a

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The Message From The Jobs Report – The Economy Is Slowing

April 8, 2019

Last week, the Bureau of Labor Statistics (BLS) published the March monthly “employment report” which showed an increase in employment of 196,000 jobs. As Mike Shedlock noted on Friday:
“The change in total non-farm payroll employment for January was revised up from +311,000 to +312,000, and the change for February was revised up from +20,000 to +33,000. With these revisions, employment gains in January and February combined were 14,000 more than previously reported. After revisions, job gains have averaged 180,000 per month over the last 3 months.
BLS Jobs Statistics at a Glance
Nonfarm Payroll: +196,000 – Establishment Survey
Employment: -201,000 – Household Survey
Unemployment: -24,000 – Household Survey
Involuntary Part-Time Work: +189,000 – Household Survey
Voluntary Part-Time Work:

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Experience Is The Only Cure 04-06-19

April 6, 2019

Market Review – The Run For The Highs Continues
Experience Is The Only Cure
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A Run For The Highs Continues

“Fueling the markets are statements from past and present Fed Governors that are not only dovish but discuss a resumption of QE and negative interest rates. Former Fed Chairman, Janet Yellen, recently said the Fed needs more tools to battle a financial crisis. This is the same Janet Yellen that, in June of 2017, stated that she did not believe we would have a financial crisis in our lifetimes.
The Fed is sounding the alarms.” – Michael Lebowitz, (Try it FREE for 30-days)

Last week, we discussed the market’s advance from the lows and why retesting old highs

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Technically Speaking: Do You Really Want To Be Out?

April 2, 2019

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Do You Really Want To Be Out?
That was a comment made several times last week with respect to the markets stellar first quarter performance.
“The S&P 500 is on track for its best quarter in a decade, up roughly 12 percent. And if history is any indication, the index could be set for more gains for the rest of the year.
In nine of the 10 previous times since 1950 that the S&P returned more than 10 percent in the first quarter, it went on to post

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