Saturday , October 31 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

#MacroView: The Fed Will Monetize All Of The Debt Issuance

1 day ago

There has been a rising concern as of late about surging inflation as the Government injects more stimulus into the economy. While it seems logical, the reality will be quite different as weak economic growth rates force the Fed to monetize the entirety of future debt issuances.
The Inflation Premise
To fully explain why the Fed is now trapped, we must start with the inflation premise. The consensus expectation is the massive increases in monetary stimulus will spark inflationary pressures. Using the money supply as a proxy, we can compare the money supply changes to inflation.

What we find is since 1980, increases in the money supply tend to precede periods of below-average inflation. Such tends to contradict the mainstream belief that increases in the money supply will lead to

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#WhatYouMissed On RIA This Week: 10-30-20

1 day ago

What You Missed On RIA This Week Ending 10-30-20

It’s been a long week. You probably didn’t have time to read all the headlines that scrolled past you on RIA. Don’t worry, we’ve got you covered. If you haven’t already, opt-in to get our newsletter and technical updates.

Here is this week’s rundown of what you missed.

We Need You To Manage Our Growth.

Are you a strong advisor who wants to grow your practice? We need partners we can work with to manage our lead flow. If you are ready to move your practice forward, we would love to talk.

What You Missed This Week In Blogs

Each week, RIA publishes the research and thoughts behind the portfolio management strategy for our clients. The important focus is the risks that may negatively impact our client’s capital. These are

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Policies Over Politics: Investing For The Election

3 days ago

As we near the 2020 Presidential election, rhetoric from both sides is ramping up. Depending on your personal “echo chamber” of social media, you are likely confident why your candidate is the best choice, and the opposition is the worst. However, when it comes to economic prosperity and the financial markets, who is the best choice? To answer that question, we will focus on the “policies,” not the “politics.”
In our most recent “Candid Coffee” event, I sat down with Danny Ratliff, CFP, and Richard Rosso, CFP to discuss policies over politics, and investing for the election.
In our conversation, we cover much of the data I recently produced in “Whoever Wins, We All Lose,” from the impact of debts, and deficits, on economic growth, the Candidates policy prescriptions, and how the markets

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Technically Speaking: It’s Coming. A Huge Bond Buying Opportunity.

4 days ago

Here we go again. After plunging to new lows, the calls for the end of the “bond bull” market mount each time rates rise. Is this time the end of the “bond bull?” Or, is there another huge bond-buying opportunity to come? 
We recently reduced our exposure to bonds, the first time in years, due to the more extreme overbought condition of Treasury bonds following the pandemic’s onset. The long-term chart of yields below shows this to be the case.

There are two critical points to take away from the chart above.
Interest rates are currently extremely oversold (top and bottom panels), suggesting that rates could indeed rise over the next few months. Such could coincide with another stimulus package or the passage of an “infrastructure” bill that leads to short-term inflationary concerns.
When

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Why Debt-To-Income Ratios Are Worse Than They Appear

5 days ago

I recently published an article discussing why “recessions” are a good thing by reverting debt buildups excesses during expansions. The argument against debt reversions is always the same in that “debt-to-income” ratios low. To wit:
“One reason (of many) we don’t need a debt reversion is that household debt service costs (interest etc.) as a % of household incomes are currently at a 40 year low.” – S. Porter
If you look at a chart, it certainly would seem that would be the case.

But, like most data from the Federal Reserve, you have to dig behind the numbers to reveal the real story.
So let’s do that, shall we?

This is exactly why the Fed’s "Debt to income ratios" are wrong. (The ratios are heavily skewed by the top 10% of income earners. Bottom 80% in debt up to their eyeballs.)

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Stimulus. No Stimulus. Market Bounces With Headlines. 10-23-20

7 days ago

In this issue of “Stimulus. No Stimulus. Market Bounces With Headlines.”
Market Bounces With Headlines
Back To Excess Optimism
Bull Now, Bear Later
Portfolio Positioning Update
MacroView: Recessions Are A Good Thing, Let Them Happen
Sector & Market Analysis
401k Plan Manager
Follow Us On: Twitter, Facebook, Linked-In, Sound Cloud, Seeking Alpha
We Need You To Manage Our Growth.
Are you a strong advisor who wants to grow your practice? We need partners we can work with to manage our lead flow. If you are ready to move your practice forward, we would love to talk.
Catch Up On What You Missed Last Week

Market Bounces With Headlines
Over the past couple of weeks, markets haven’t paid much attention to the economic or earnings data but have drifted from one “stimulus” headline to the next.

Read More »

#MacroView: Policies Over Politics. Whoever Wins, We All Lose

8 days ago

As we near the 2020 Presidential election, rhetoric from both sides is ramping up. Depending on your personal “echo chamber” of social media, you are likely confident why your candidate is the best choice, and the opposition is the worst. However, when it comes to economic prosperity and the financial markets, who is the best choice? To answer that question, we will focus on the “policies,” not the “politics.”
The Pre-Election Event
“Policies, Not Politics.” 
Join Richard Rosso, CFP, and Danny Ratliff, CFP, for an in-depth look at both party’s platforms and how upcoming changes could affect your retirement, social security, medicare, and how you invest. From taxes to the markets, they will provide the answers you are looking for.
When: TOMORROW – Saturday, October 24th, 2020
Time: 8-9am

Read More »

#WhatYouMissed On RIA This Week: 10-23-20

8 days ago

What You Missed On RIA This Week Ending 10-23-20

It’s been a long week. You probably didn’t have time to read all the headlines that scrolled past you on RIA. Don’t worry, we’ve got you covered. If you haven’t already, opt-in to get our newsletter and technical updates.

Here is this week’s rundown of what you missed.

The Pre-Election Event

“Policies, Not Politics.” 

Join Richard Rosso, CFP, and Danny Ratliff, CFP for an in-depth look at both party’s platforms and how upcoming changes could affect your retirement, social security, medicare, and how you invest. From taxes to the markets, they will provide the answers you are looking for. 

When: Saturday, October 24th, 2020Time: 8-9amWhere: An exclusive GoTo Webinar Event (Register Now)What You Missed This Week In Blogs

Read More »

Technically Speaking: Market Bulls Are “All-In” Again

11 days ago

“Corrections” generally occur over short time frames, do not break the prevailing trend in prices, and are quickly resolved by markets reversing to new highs.
“Bear Markets” tend to be long-term affairs where prices grind sideways or lower over several months as valuations are reverted.
I discussed this concept in the video below.
[embedded content]

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Neel Kashkari Is The Definition Of “Moral Hazard”

12 days ago

Neel Kashkari, in a recent CNBC interview, said, “I don’t see any moral hazard here“ when asked if the Fed’s massive liquidity injections have blown a bubble.
What exactly is the definition of “moral hazard.” 

Noun – ECONOMICS

The lack of incentive to guard against risk where one is protected from its consequences, e.g., by insurance.

Take a look at the following chart.

The Zombie Apocolypse
Zombie companies depend on a speculative investment climate for bond issuance for their survival. As discussed in “Recessions Are A Good Thing:”
“‘Zombies’ are firms whose debt servicing costs are higher than their profits but are kept alive by relentless borrowing. 
Such is a macroeconomic problem. Zombie firms are less productive, and their existence lowers investment in, and

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Market Stumbles As Stimulus Hopes Fade 10-16-20

14 days ago

In this issue of “Market Stumbles As Stimulus Hopes Fade.”
Hopes For More Stimulus
Election Night Risk
Economic Disappointment
Portfolio Positioning Update
MacroView: Recessions Are A Good Thing, Let Them Happen
Sector & Market Analysis
401k Plan Manager
Follow Us On: Twitter, Facebook, Linked-In, Sound Cloud, Seeking Alpha
The Pre-Election Event
“Policies, Not Politics.” 
Join Richard Rosso, CFP, and Danny Ratliff, CFP, for an in-depth look at both party’s platforms and how upcoming changes could affect your retirement, social security, medicare, and how you invest. From taxes to the markets, they will provide the answers you are looking for.
When: Saturday, October 24th, 2020
Time: 8-9am
Where: An exclusive GoTo Webinar Event (Register Now)
Catch Up On What You Missed Last Week

Market

Read More »

#MacroView: Recessions Are A Good Thing, Let Them Happen

15 days ago

It is a given that you should never mention the “R” word. People immediately assume you mean the end of the world: death, disaster, and destruction. Unfortunately, the Federal Reserve and the Government also believe recessions “are bad.” As such, they have gone to great lengths to avoid them. However, what if “recessions are a good thing,” and we just let them happen?
“What about all the poor people that would lose their jobs? The companies that would go out of business? It is terrible to think such a thing could be good.”
Sometimes destruction is a “healthy” thing, and there are many examples we can look to, such as “forest fires.”
Wildfires, like recessions, are a natural part of the environment. They are nature’s way of clearing out the dead litter on forest floors, allowing essential

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#WhatYouMissed On RIA This Week: 10-16-20

15 days ago

What You Missed On RIA This Week Ending 10-16-20

It’s been a long week. You probably didn’t have time to read all the headlines that scrolled past you on RIA. Don’t worry, we’ve got you covered. If you haven’t already, opt-in to get our newsletter and technical updates.

Here is this week’s rundown of what you missed.

The Pre-Election Event

“Policies, Not Politics.” 

Join Richard Rosso, CFP, and Danny Ratliff, CFP for an in-depth look at both party’s platforms and how upcoming changes could affect your retirement, social security, medicare, and how you invest. From taxes to the markets, they will provide the answers you are looking for. 

When: Saturday, October 24th, 2020Time: 8-9amWhere: An exclusive GoTo Webinar Event (Register Now)What You Missed This Week In Blogs

Read More »

Technically Speaking: COT – Everyone’s Back In The Pool: Q3-2020

18 days ago

As discussed in Hopes Of More Stimulus, the market has rebounded following the September decline. Unfortunately, the market has again gotten quite ahead of the fundamentals as money continues to chase performance. In the Q3-2020 review of the Commitment Of Traders report (COT,) we can see how positioning has moved back towards extremes. Once again, “everyone’s back in the pool.” 
The market remains in a bullish trend from the March lows but has returned to more extreme overbought conditions on an intermediate-term basis. Despite valuations on a 2-year forward basis at more extreme levels, economic growth recessionary, and a significant risk of a failure to pass more stimulus, investors continue to chase markets.

Furthermore, as noted in this past weekend’s newsletter:
“Retail investors

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The K-Shaped Recovery. A “V” For Some, Not For Most.

19 days ago

Economists have come up with every variation of applying a letter of the alphabet to the economic recovery. Whether it’s an “L,” a “W” or a “V,” there is a letter that suits your view. But what is a “K”-shaped recovery?
Take a closer look at the letter “K.” It’s a “V” on the top, and an inverted “V” on the bottom.
According to Investopedia:
“A K-shaped recovery occurs when, following a recession, different parts of the economy recover at different rates, times, or magnitudes. This is in contrast to an even, uniform recovery across sectors, industries, or groups of people. A K-shaped recovery leads to changes in the structure of the economy or the broader society as economic outcomes and relations are fundamentally changed before and after the recession.

Creative Destruction
Following the

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Market Regains Footing On Hopes Of More Stimulus 10-09-20

21 days ago

In this issue of “Market Regains Footing On Hopes Of More Stimulus.”
Hopes For More Stimulus
Market Regains Its Footing
Policies Over Politics
Portfolio Positioning Update
MacroView: The Second Derivative Of More Stimulus
Sector & Market Analysis
401k Plan Manager
Follow Us On: Twitter, Facebook, Linked-In, Sound Cloud, Seeking Alpha
The Pre-Election Event
“Policies, Not Politics.” 
Join Richard Rosso, CFP, and Danny Ratliff, CFP, for an in-depth look at both party’s platforms and how upcoming changes could affect your retirement, social security, medicare, and how you invest. From taxes to the markets, they will provide the answers you are looking for.
When: Saturday, October 24th, 2020
Time: 8-9am
Where: An exclusive GoTo Webinar Event (Register Now)
Catch Up On What You Missed Last

Read More »

#MacroView: More Stimulus And The 2nd Derivative Effect

22 days ago

There is currently much hope for another fiscal stimulus package to be delivered to the economy from Congress. While President Trump recently doused hopes of a quick passage, there a demand for more stimulus by both parties. While most hope more stimulus will cure the economy’s ills, it will likely disappoint due to the “2nd derivative effect.”
Let me explain.
In March, as the economy shut down due to the pandemic, the Federal Reserve leaped into action to flood the system with liquidity. At the same time, Congress passed a massive fiscal stimulus bill that expanded Unemployment Benefits and sent checks directly to households. As shown in the chart below of the upcoming expected GDP report, it worked. (We estimated GDP to increase by 30% from the previous quarter.)

That expected 30% surge

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#WhatYouMissed On RIA This Week: 10-09-20

22 days ago

What You Missed On RIA This Week Ending 10-09-20

It’s been a long week. You probably didn’t have time to read all the headlines that scrolled past you on RIA. Don’t worry, we’ve got you covered. If you haven’t already, opt-in to get our newsletter and technical updates.

Here is this week’s rundown of what you missed.

The Pre-Election Event

“Policies, Not Politics.” 

Join Richard Rosso, CFP, and Danny Ratliff, CFP for an in-depth look at both party’s platforms and how upcoming changes could affect your retirement, social security, medicare, and how you invest. From taxes to the markets, they will provide the answers you are looking for. 

When: Saturday, October 24th, 2020Time: 8-9amWhere: An exclusive GoTo Webinar Event (Register Now)What You Missed This Week In Blogs

Read More »

Technically Speaking: Why This Is Still A Sellable Rally, For Now.

25 days ago

In this past weekend’s missive “Trump Infects Markets Bounce,” we discussed even though the market had bounced off support, we still consider it a “sellable rally,” for now. The comment generated quite a few emails, mainly since we also discussed that markets are generally positive in election years. To wit:
“Lance, I am confused. On one hand you say that investors should use any near-term rally to rebalance risks. But then discuss how markets tend to be positive the majority of the time during election years. I am not sure what to do.” – KC
It’s a great question that drives to the heart of our risk management process.
Let’s start with our comment from the newsletter:
“Notably, while the rally that we have witnessed from the recent lows has eaten up a fair bit of the previous oversold

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Fed Study: How We Made The Top 10% Richer Than Ever.

26 days ago

Every three years, the Federal Reserve releases a study on consumer finances that is a stockpile of data on everything from household net worth to incomes. The 2019 Fed survey confirms statements I have made previously regarding how the Fed’s monetary interventions made the top 10% more prosperous than ever. They just left the vast majority of Americans behind.
While we will address the statistical data, there is also the anecdotal evidence that supports this thesis. Since 2008 there have been rising calls for socialistic policies such as universal basic incomes, increased social welfare, and even a two-time candidate for President who was an admitted socialist. Such things would not occur if “prosperity” was flourishing within the economy. 
Fed Or Growth
“The disparity between the Fed’s

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Trump’s COVID Infects The Market Bounce. Is It Over? 10-02-20

28 days ago

In this issue of “Trump’s COVID Infects The Market Bounce, Is It Over?”
Administrative Note
Market Catches Trump’s COVID Infection.
Does It Matter Who Wins The Election?
Portfolio Positioning Update
MacroView: The Astonishing Lack Of Value In Value
Sector & Market Analysis
401k Plan Manager
Follow Us On: Twitter, Facebook, Linked-In, Sound Cloud, Seeking Alpha
We Need You To Manage Our Growth.
Are you a strong advisor who wants to grow your practice? We need partners we can work with to manage our lead flow. If you are ready to move your practice forward, we would love to talk.
Catch Up On What You Missed Last Week

Administrative Note
Yes. Yes. I know. I have not done any videos this week for our YouTube Channel. 
One of the benefits of getting older is you get the opportunity to undergo

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#MacroView: CBO – The “One-Way Trip” Of American Debt

29 days ago

We have frequently discussed the “one-way trip” of American debt and the long, slow slide into the “Japanification” of America.
The amount of outstanding debt, and the subsequent deficit, has long been a problem in the U.S. For the last two decades, policymakers have made annual promises for more substantial economic growth. Yet with each passing year, growth rates weaken, and economic prosperity worsens. As we discussed pre-pandemic in “Economy Should Grow Faster Than Debt:”
“The chart below shows the deficit, 10-year average GDP growth, and the annual change in Federal Debt. The problem should be obvious. Since the Federal government began ramping up debt, and running deficits, growth continues to deteriorate. Such is not a coincidence.”

“The government is already running a massive

Read More »

#WhatYouMissed On RIA This Week: 10-02-20

29 days ago

What You Missed On RIA This Week Ending 10-02-20

It’s been a long week. You probably didn’t have time to read all the headlines that scrolled past you on RIA. Don’t worry, we’ve got you covered. If you haven’t already, opt-in to get our newsletter and technical updates.

Here is this week’s rundown of what you missed.

The Pre-Election Retirement Guide

“Policies, Not Politics.” 

Join Richard Rosso, CFP, and Danny Ratliff, CFP for an in-depth look at both party’s platforms and how upcoming changes could affect your retirement, social security, medicare, and how you invest. From taxes to the markets, they will provide the answers you are looking for. 

When: Saturday, October 3rd, 2020Time: 9-11amWhere: An exclusive GoTo Webinar Event (Register Now)What You Missed This Week

Read More »

Shedlock: Income Down, Spending Up As Stimulus Runs Out

October 1, 2020

In the latest personal income and spending reports, income was down but spending was up even as stimulus measures run out.

Personal Income & Outlays

The Personal Income and Outlays, report for August 2020 shows increasing stress on consumers. 

Real PCE vs Real DPI 2020 Detail

Increasing Consumer Stress

Personal income decreased 2.7 percent while consumer spending increased 1.0 percent in August.

Real disposable income declined 3.5% while real spending rose 0.7%.

Stimulus Runs Out

The Covid $600 stimulus checks ended July 25.

The $300 stimulus checks ended September 5. 

For details, please see Trump’s $300 Lost Wage Assistance Benefit Ended in 10 States

Fiscal stimulus has has run its course.  Without more stimulus both stronger incomes and spending are at

Read More »

David Robertson: Innovating In A Time Of Change

October 1, 2020

Innovating In A Time Of Change
One of the most prominent images associated with innovation is that of tinkering. It is easy to envision an entrepreneur tinkering away in a workshop or garage trying to develop that big idea. The characterization was captured well by Thomas Edison’s declaration:
“Success is 90% perspiration and 10% inspiration!”
This approach can work well, especially when the goal is incremental improvement. It can come up short, though, during times when the understanding of what is considered valuable changes. As Covid-19 has inspired a lot of fresh thinking about how we do things, there is an emerging opportunity to innovate differently.

Better Mousetraps
It is hard to overstate the importance of innovation as a concept in business. Innovation can secure or increase

Read More »

Technically Speaking: Tudor’s 10-Rules To Navigate Q4-2020

September 29, 2020

In this week’s Technically Speaking, I wanted to review Paul Tudor Jones’ 10-rules and how to navigate the market for the rest of 2020. Due to a small surgery, I am out of commission this week, so I had to write this article on Saturday. The data is as of Friday’s close, but given we are looking at weekly and monthly charts, it doesn’t change the analysis.
Recap
As noted in “The Sell-Off Is Overdone,” on a very short-term basis, the recent correction has played out much as we suggested in the middle of August.
Over the last couple of weeks, we have been discussing the ongoing market correction. As shown below, the sell-off has been orderly and not one of a “panic” induced decline.
The market did retrace from the top of the 2-standard deviation range to the bottom, which is part of a

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“Enormous Uncertainty” Despite Fed Fueled Market Surge.

September 28, 2020

“Enormous Uncerntainty.” That is how SimplyWise stated the situation in their latest “retirement confidence survey.” Such is despite a surging stock market from the March lows, trillions in liquidity support from the Fed, and a rebound in economic activity.
So, what’s the problem? Here is SimplyWise:
The current public heath, economic, and political reality in the United States has created enormous uncertainty for many Americans. A majority of citizens lack the savings to last them even three months. That savings gap is even more drastic when it comes to retirement. Indeed, the pandemic has wrought havoc on the retirement plans of many, driving some into early retirement and forcing others to postpone long-anticipated retirement plans. A majority of people today are more concerned than

Read More »

The Sell-Off Is Overdone. The Correction May Not Be. 09-25-20

September 26, 2020

In this issue of “The Sell-Off Is Overdone. The Correction May Not Be.”
An Orderly Sell-Off
Is The Fed Done?
The Correction May Not Be Over
Portfolio Positioning Update
MacroView: A Permanent Shift To Valuations
Sector & Market Analysis
401k Plan Manager
Follow Us On: Twitter, Facebook, Linked-In, Sound Cloud, Seeking Alpha
The Pre-Election Retirement Guide
“Policies, Not Politics.” 
Join Richard Rosso, CFP, and Danny Ratliff, CFP, for an in-depth look at both party’s platforms and how upcoming changes could affect your retirement, social security, medicare, and how you invest. From taxes to the markets, they will provide the answers you are wanting.
When: Saturday, October 3rd, 2020
Time: 9-11 am
Where: An exclusive GoTo Webinar Event (Register Now)
Catch Up On What You Missed Last Week

Read More »

#MacroView: The Astonishing Lack Of Value In Value

September 25, 2020

We have recently been discussing the lack of performance in value versus growth. Such is historically the case during the late-stage, exuberance-driven, bull markets. However, not everything classified as a “value stock” is necessarily a value. The problem today, more so than at any point previously, is the astonishing lack of value in “value.”

Be careful about what you are paying for. pic.twitter.com/P6wkg2kb4O
— Lance Roberts (@LanceRoberts) September 18, 2020

The chart is pretty stunning but needs some explanation.
The Problem With Book
Valuing a company is not a simple task. Every fundamental analyst uses different measures and adjustments to calculate a fair valuation. Importantly, there is no precise method, and each presents a different version with varying results. Such is why

Read More »

#WhatYouMissed On RIA This Week: 09-25-20

September 25, 2020

What You Missed On RIA This Week Ending 09-25-20

It’s been a long week. You probably didn’t have time to read all the headlines that scrolled past you on RIA. Don’t worry, we’ve got you covered. If you haven’t already, opt-in to get our newsletter and technical updates.

Here is this week’s rundown of what you missed.

The Pre-Election Retirement Guide

“Policies, Not Politics.” 

Join Richard Rosso, CFP, and Danny Ratliff, CFP for an in-depth look at both party’s platforms and how upcoming changes could affect your retirement, social security, medicare, and how you invest. From taxes to the markets, they will provide the answers you are looking for. 

When: Saturday, October 3rd, 2020Time: 9-11amWhere: An exclusive GoTo Webinar Event (Register Now)What You Missed This Week

Read More »