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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

Examining The Most Hated Bull Market Ever 10-20-17

8 hours ago

Examining The Most Hated Bull Market Ever
Sector & Market Analysis
401k Plan Manager
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Examining The “Most Hated Bull Market Ever”
From last week:
“The seemingly “impervious” advance since the election last November, has had an interesting “stair step” pattern with each advance commencing from a breakout of a several month 3%-ish consolidation range. Furthermore, each advance then pushes to a 3-standard deviation extreme, black circles, of the 50-dma before beginning the next consolidation trading range.”

The last leg higher has been directly responsive to the ramp up in the political “marketing surge” surrounding “tax cuts and tax reform.” With the House having already passed their respective budget resolutions, late

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Weekend Reading: 24000 By Christmas?

2 days ago

This past week, the Dow crested 23000 sending the networks into a “tizzy.” It took about 5-minutes of crossing that magical “round number,” before questions raised of how long before the markets cross 24,000, and 25,000.
The chart below shows the 1000-point milestones of the Dow going back to 2009. After a long break between 18,000 and 19,000 in 2015 through the election in 2016, the Dow has surged higher ticking off 4-more milestones in less than a year.

As I have shown previously, these late stage “melt-ups” are not uncommon. In fact, as shown below, it is something witnessed prior to every market peak previously. 

As I stated just recently:
“This past weekend, I discussed what appears to be the markets ongoing melt-up toward its inevitable conclusion. Of course, that move is

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RIA Chart Book: Q3-2017 Most Important Charts

3 days ago

Michael Lebowitz and I have produced a number of charts that have generated a lot of questions, comments, and shares over the last year. We decided that each quarter we will begin producing a “chart book” of the “most important charts” from the last quarter for you to review.
We have provided the links in most cases back to the original articles as well for further clarification and context if needed. We hope you find them useful and insightful.
Time To Breakeven
While individuals are inundated with a plethora of opinions on why the index is moving up or down from one day to the next, a portfolio of dollars invested in the market is vastly different than the index itself. I have pointed out the problems of benchmarking previously stating:
The index contains no cash
It has no life

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Technically Speaking: Clarifying Overbought, Extended & Bullish

5 days ago

The market is downright bullish. There is little reason to argue the point given the bullish trends of markets globally which are strongly trending, positively correlated, and simultaneously breaking out to all-time highs. Of course, such is not surprising given the massive levels of Central Bank interventions, suppressed interest rates, and global coordination between Government’s and major asset managers (banks) over the last eight years.
Importantly, as bullishness has reached historically high levels, the fear of a market crash, or another crisis, has faded into the abyss. As Mark DeCambre noted:
“By at least one measure, the S&P 500 index is on pace to register its lengthiest period of quiescence in more than two decades—and perhaps ever.
The broad-market benchmark hasn’t experienced

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Investors Are Ignoring The Evidence At Their Peril

6 days ago

I was recently watching a movie about the FBI trying to bring down a terrorist cell in the U.S. During their investigation, their evidence board became more and more cluttered with people, evidence, and locations as they attempted to track down the “cell.” At first, the clues were disparate, and they didn’t provide a clear path to the end goal. But as more clues were obtained, the bigger picture emerged eventually leading to the successful ending of the terrorist threat.
It got me to thinking about what is currently happening in the markets. As stocks rang new highs last week, there were several disparate stories that caught my attention. Individually, each story is nothing to be overly concerned about, and are regularly dismissed by investors. However, when you begin linking these

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The Coming “Snap-Back” Of Markets 10-13-17

7 days ago

Bull Market Maintains Momentum
You’re Making My Brain Hurt
Reversion To The Mean – Is That A Thing?
What We’re Doing Now
Sector & Market Analysis
401k Plan Manager
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Bull Market Maintains Momentum
Last week, I addressed some interesting stats from Adam Taggart via Peak Prosperity:
“It has been over 100 months (more than 8.5 years) since the current bull market began in April of 2009
It has been 15 months since the last (and very brief) drop of 5% in the S&P 500
This past September saw record low volatility, including a stretch now claimed to be “the most peaceful days in the history of the markets”
Since last year’s presidential election, at which point the markets were already considered dangerously overvalued, the Dow

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Weekend Reading: $7 Trillion To Manipulate Prices

9 days ago

As the stock market continues to press new highs, the level of optimism climbs with it. I discussed yesterday Richard Thaler’s, a recent recipient of the Nobel Price in Economics, comments about not understanding the current “irrationality of investors relating to their investing behavior.”
What is interesting is that Thaler’s received his Nobel Prize for his pioneering work in establishing that people are predictably irrational — that they consistently behave in ways that defy economic theory. For example, people will refuse to pay more for an umbrella during a rainstorm; they will use the savings from lower gas prices to buy premium gasoline; they will offer to buy a coffee mug for $3 and refuse to sell it for $6.
The fact that a man who studies the “irrationality of individuals” is

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Bogle, Buffett, Shiller & Tobin – Valuations Are Expensive

10 days ago

During my morning reading, I ran across a couple of very interesting articles that tied a common theme relating to the current risks in the financial markets.
Via Zerohedge:
88-year-old investing icon John “Jack” Bogle, founder of the Vanguard Group, said:
“The valuations of stocks are, by my standards, rather high, but my standards, however, are high.
When considering stock valuations, Bogle’s method differs from Wall Street’s. For his price-to-earnings multiple, Bogle uses the past 12 months of reported earnings by corporations, GAAP earnings, which include ‘all of the bad stuff,’ to get a multiple of about 25 or 26 times earnings.
‘Wall Street will have none of that. They look ahead to the earnings for the next 12 months and we don’t really know what they are so it’s a little gamble.’

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Technically Speaking: Extremes Everywhere (COT Update)

12 days ago

This past weekend, I discussed what appears to be the markets ongoing melt-up toward its inevitable conclusion. Of course, that move is supported by the last of the “holdouts” that finally capitulate and take the plunge back into a market that “can seemingly never go down.” But therein lies the danger. To wit:
“However, it should be noted that despite the ‘hope’ of fiscal support for the markets, longer-term conditions are currently present that have led to rather sharp market reversions in the past.”

“Regardless, the market is currently ignoring such realities as the belief ‘this time is different’ has become overwhelming pervasive.”
The other problem on a short-term basis is the market is pushing very elevated levels currently. As shown below, with RSI (14) now above 70, the market

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One Chart Shows Investors Are Dealt A Losing Hand

13 days ago

The rise in the market has seemed unstoppable. Despite the Federal Reserve continuing to hike interest rates and tightening monetary policy, geopolitical risks from North Korea to Iran, mass shootings, failure of legislative agenda and weak economic growth – the market’s rise has continued unabated.
Much of the recent rise, as discussed last week, has been based upon faulty assumptions about the effect of tax cuts and reforms. However, in the short-term, it is always the exuberance of market participants chasing returns as the “fear of missing out,” or FOMO, overrides the logic of fundamentals.
The problem for investors is that since fundamentals take an exceedingly long time to play out, as prices become detached “reality,” it becomes believed that somehow “this time is different.”

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Most Hated Bull Market Ever? 10-06-17

14 days ago

Melt-Up Gains Traction
Most Hated Bull Market Ever
This Won’t End Well
Sector & Market Analysis
401k Plan Manager
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Melt-Up Gains Traction
Back in November, just following the election of President Trump, I wrote about the market entering into potentially the final “melt-up” phase of the cyclical bull market.
However, while economic and fundamental realities HAVE NOT changed since the election, markets are pricing in expected impacts of changes to fiscal policy expecting a massive boost to earnings from tax rate reductions and repatriated offshore cash to be used directly for stock buybacks.

To wit:
“We expect tax reform legislation under the Trump administration will encourage firms to repatriate $200 billion of

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Weekend Reading: Bull Market In Complacency

16 days ago

With the market recently breaking above 2500, there seems to be nothing to dampen the bullish exuberance. The recent run, which has largely been focused on areas in the market with the most sensitivity to tax cuts, has exploded over the last two weeks to record highs. That explosion has also lead to a surge in the Market Greed/Fear Gauge which comprises different measures of market complacency and bullishness.

But the rush to chase performance can be clearly seen in the chart below of the S&P 600 index (small cap) which is now 4-standard deviations above the 6-month moving average.

Then there is the widely viewed CNN Fear/Greed Index.

Of course, not surprisingly, with investors as optimistic and bullish as they can be equity to money market ratios are at extremes.

And “Dumb Money” is

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Bull Trap: The False Promise Of Tax Cuts

17 days ago

Last week, I did a fairly extensive analysis on the release of the 9-page “Trump Tax Cut” plan. 
The most important aspect of that discussion was the difference between 1982, the last time there was permanent tax reform, as compared to today.
“Comparing Trump’s economic policy proposals to those of Ronald Reagan. For those that deem that bullish, we remind you that the economic environment and potential growth of 1982 was vastly different than it is today.  Consider the following table:‘”

The differences between today’s economic and market environment could not be starker. The tailwinds provided by initial deregulation, consumer leveraging and declining interest rates and inflation provided huge tailwinds for corporate profitability growth.
Most importantly, when tax cuts were

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Technically Speaking: The 80/20 Rule Of Investing

19 days ago

Over the weekend, I discussed the market’s breakout to the upside and the increase in equity exposure in client’s portfolios. As I stated:
“The short-term analysis of the market remains broadly positive with both the ongoing bullish trend and recent break above 2500 remaining intact through the close on Friday. 
As shown below, the market is pushing a short-term ‘buy’ signal. However, now at 2-standard deviations above the 75-dma, as seen previously, the market likely has limited upside from here.”

“The breakout, of course, was driven by continued hopes of tax cuts/reforms from the White House as details of the latest proposal from the House Ways and Means Committee were released this week.  (Click Here For Details & Analysis)
More importantly, since the March 9th, 2009 lows, the bull

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Fed Study: The Bottom 90% & The Failure Of Prosperity

20 days ago

As the stock market hits all-time highs in its 2nd longest bull market run in history, the lift of asset prices has surely lifted the economic prosperity of all. Right?
Not really.
New reports from the Hamilton Project and The Federal Reserve show the real problems facing Americans today.
First, the Hamilton Project as noted by Pedro Nicolaci Da Costa last week:
“An expansion that began, believe it or not, more than seven years ago has extended a longer-run trend of wage stagnation for the average US worker, despite a sharp drop in the official unemployment rate to 4.4% from an October 2009 peak of 10%.
No wonder the recovery seems so lopsided, particularly given economic inequality levels not seen since before the Great Depression. After adjusting for inflation, wages are just 10% higher

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Bull Run Continues On Tax Cut Hopes – 09-29-17

21 days ago

Tax Cut Hopes Spur Bull Run
The Real Problem Of Buy And Hold
Bull Market In Complacency
Sector & Market Analysis
401k Plan Manager
Follow Us On: Twitter, Facebook, Linked-In, Sound Cloud, Seeking Alpha
Tax Cut Hopes Spur Bull Run
Let’s pick up where we left off last week:
“The short-term analysis of the market remains broadly positive with both the ongoing bullish trend and recent break above 2500 remaining intact through the close on Friday. As I noted last weekend:
As shown below, the market is pushing a short-term ‘buy’ signal. However, now at 2-standard deviations above the 75-dma, as seen previously, the market likely has limited upside from here.”

The breakout, of course, was driven by continued hopes of tax cuts/reforms from the White House as details of the latest proposal from

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Weekend Reading: Tax Cut Wish List

23 days ago

On Wednesday, the President announced his plan to cut taxes for Americans, return jobs to America and return the country to economic prosperity.
It’s a tall order to fill, and the proposed tax reform is a “Christmas Wish List” that will have to checked twice to determine which parts are “naughty” and “nice.”
As I pointed out yesterday,
“The belief that tax cuts will eventually become revenue neutral due to expanded economic growth is a fallacy. As the CRFB noted:
‘Given today’s record-high levels of national debt, the country cannot afford a deficit-financed tax cut. Tax reform that adds to the debt is likely to slow, rather than improve, long-term economic growth.’
The problem with the claims that tax cuts reduce the deficit is that there is NO evidence to support the claim. The

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The “Trump Tax Plan” – Details & Analysis

24 days ago

Almost a full year after the election of Donald Trump to the White House, one of the key promises made to voters was the largest “tax cut” since Ronald Reagan was in office. As President Trump stated in Indiana yesterday:
“This is a revolutionary change, and the biggest winners will be middle-class workers as jobs start pouring into our country, as companies start competing for American labor, and as wages continue to grow. This will be the lowest top marginal income tax rate for small and mid-size businesses in more than 80 years.”
Here are the major points as summed up by BI.
Business tax changes:
A 20% corporate tax rate. This is the first time Trump has publicly backed down from one of his earliest campaign promises: a 15% corporate tax rate. The budget math required for a 15% rate

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Technically Speaking: Is The Rally In Oil Sustainable

26 days ago

I have been getting a tremendous number of emails as of late asking if the latest rally in oil prices, and related energy stocks, is sustainable or is it another “trap” as has been witnessed previously.
With geopolitical turmoil mounting, for North Korea to Iran, and as natural disasters have rocked the refinery capital of the world (Houston,) the question is not surprising.
As regular readers know, we exited oil and gas stocks back in mid-2014 and have remained out of the sector for technical and fundamental reasons for the duration. While there have been some opportunistic trading setups, the technical backdrop has remained decidedly bearish.
Today, I am going to review the fundamental supply/demand backdrop, as well as the technical price setup, as things have improved enough to

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Dalbar 2017: Investors Suck At Investing & Tips For Advisors

27 days ago

Several years ago, I began writing an annual update discussing Dalbar’s Quantitative Analysis Of Investor Behavior study. The study showed just how poorly investors perform relative to market benchmarks over time and the reasons for that underperformance.
With the release of Dalbar’s 2017 study, I can update, and remind you, of the problems investors continue to face despite the ongoing media and mainstream rhetoric about “investing for the long-term” and other such nonsense like “dollar cost averaging” and “buy and hold” investing. 
Let’s jump right in.
You Can’t Beat An Index…Period
First of all, let’s dismiss the notion that it is possible for an investor to consistently “beat” an index over long periods of time.
You can’t.
Indexes do not account for the impact of taxes, trading costs,

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Whatever The Fed Does…It’s Bullish – 09-22-17

28 days ago

It’s Bullish
Reality Bites
Clinging To 2500
Sector & Market Analysis
401k Plan Manager
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It’s Bullish…
On Wednesday, the Federal Reserve announced the latest decision by the Federal Open Market Committee with respect to monetary policy. That decision contained two primary components:
No rate hike currently, although, as expected, announcements of further rate hikes in the future, and;
The beginning of the process to cease reinvestment of the Fed’s balance sheet. 
The announcement was notable for two reasons:
The Fed did NOT hike rates because the underlying economic data, and, in particular, the inflation data, suggests the economy is too weak to absorb a further increase currently, and;
The unwinding of the balance

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Weekend Reading: Yellen Takes Away The Punchbowl

September 22, 2017

September 20th, 2017 will likely be a day that goes down in market history.
It will either be remembered as one of the greatest achievements in the history of monetary policy experiments, or the beginning of the next bear market or worse.
Given the Fed’s inability to spark either inflation or economic growth, as witnessed by their dismal forecasting record shown below, I would lean towards the latter.

The media is very interesting. Despite the fact there is clear evidence that unbridled Central Bank interventions supported the market on the way up, there is now a consensus that believes the “unwinding” will have “no effect” on the market.
This would seem to be naive given that, as shown below, the biggest injections of liquidity from the Fed have come near market bottoms. Without the

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4-Warnings For The Bull Market

September 21, 2017

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.
After I had broken my wrist, I understood what he meant.
With that in mind, there are currently plenty of warning signs individuals might want to consider before taking that leap. Here

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Technically Speaking: The Danger Of Performance Chasing

September 19, 2017

In this past weekend’s newsletter, I addressed three of my concerns for the markets going forward.
“Chart 2) One of the hallmarks of a late-stage bull market cycle is the acceleration in price as investors capitulate by “jumping in” as prices accelerate. While the long-term moving averages currently suggest the bull cycle is intact, we will watch for the crossover to give us an indication of when to leave.”

The acceleration in the increase of prices is a hallmark of “exuberance” in the markets. Not surprisingly, the sharp increase in asset prices, as the markets broke through successive barriers of 2200, 2300, 2400 and 2500, has spurred investor optimism to the highest levels in 17-years as noted last week:

“The latest boost in optimism pushes the index almost 100 points higher than the

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15-Risk Management Rules For Every Investor

September 18, 2017

Last week, I was discussing the rather “Pavlovian” response to Central Bank interventions which has led investors into a false sense of security with respect to the risk being undertaken within portfolios.
This got me to thinking about “risk” and reminded me of something Howard Marks once wrote:
“If I ask you what’s the risk in investing, you would answer the risk of losing money. But there actually are two risks in investing: One is to lose money, and the other is to miss an opportunity. You can eliminate either one, but you can’t eliminate both at the same time. So the question is how you’re going to position yourself versus these two risks: straight down the middle, more aggressive or more defensive.
I think of it like a comedy movie where a guy is considering some activity. On his

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Winter Is Coming 09-15-17

September 16, 2017

Review & Update
Bonds Send A Signal
Sector & Market Analysis
401k Plan Manager
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Review & Update
Two weeks ago, I noted:
“I have a sneaky suspicion that when I update the Fed Balance Sheet reinvestment analysis next week, shown below, we are going to find a substantial, well-timed, reinvestment by the Central Bank. Wanna bet?  Well, here is the updated chart of the 4-week net change to the Fed’s balance sheet. As you can see, reinvestments have, once again, returned to the market in a very “timely” fashion. Of course, since the Fed claims they are not trying to, nor are they influenced by, the markets, this is purely coincidental. (#SarcasmAlert)”

Here is the updated chart this week as the markets broke out to new

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Weekend Reading: They’re Baaaccckkk!

September 15, 2017

I remember the first time I saw the movie “Poltergeist.” It scared the $*#@ out of me, and I slept with the lights on for a month.
Recently, I got a chance to catch a rerun. It certainly wasn’t the same experience. It was kind of like eating a “twinkie” as an adult, the sponge cake and creamy filling aren’t nearly as delicious as I remembered them. “Poltergeist” is now more of a “campy” flick with bad special effects.
But the run up in the markets over the last few days, on really no news at all, reminded me of the scene where “Carol Anne” is pointing to the static filled television screen proclaiming “they’re back.”
After a brief decline, market sentiment got bearish enough to provide the catalyst for a short-term rally. With Trump now caving in to “Chuck and Nancy,” the North Korean

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Everyone’s In The Pool

September 14, 2017

With the market breaking out to all-time highs, the media has started to once again reach for their party hats as headlines suggest clear sailing for investors ahead.
After all, why not?  We have run one of the longest stretches in history without a 5%, much less a 10% decline. Threats of nuclear war, hurricanes, disaster, fires, earthquakes, and civil unrest have failed to unnerve investors. It seems all that has been missed was famine and pestilence.
Nonetheless, the breakout is indeed bullish, and signals the continuation of the bullish trend. However, such does not mean there are more than sufficient reasons to remain cautious. As noted on Tuesday, earnings growth remains weak outside of share buybacks, along with top line revenue. There is scant evidence of economic resurgence

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Technically Speaking: How Do You Spell R-E-L-I-E-F?

September 12, 2017

In this past weekend’s newsletter. I discussed the potential for the market to hit new highs. To wit:
“The good news this week is that the market maintained last week’s advance despite the one-day tantrum earlier. Interestingly, since the election, the market has ratcheted higher in slightly more than 3% increments with each move higher followed by a drawn-out consolidation process that runs primarily along the 50-75 dma. The last sell-off tested, and held, the 100-dma but stayed within the confines of the consolidation process. The 2400 level on the S&P 500 remains the clear ‘warning level’ for investors currently.”
Chart updated through Monday’s open.

“But this short-term bullish backdrop is offset by intermediate-term bearish underpinnings as shown by the next two charts. With an

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Investing Apathy & The Death Of Your Financial Goals

September 11, 2017

Recently, Ryan Vlastelica penned a column suggesting investors should simply be “apathetic” when it comes to their money.
“Apathy doesn’t sound like a sensible investment philosophy, but it may be one of the most successful approaches a person can employ to grow wealth.”
Listen. I get it.
You can’t beat the market, so just “buy and hold.”
Over a long enough period, I agree, you will make money.
But, simply making money is not the point of investing.
We invest to ensure our current “hard earned savings” adjust over time to provide the same purchasing power parity in the future. If we “lose” capital along the way, we extend the time horizon required to reach our goals.
Crashes Matter A Lot
Ryan makes his case for “apathy” by quoting Barry Ritholtz who stated:
“If you don’t want to invest in

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