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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: Japan, The Fed, & The Limits Of QE

2 days ago

This past week saw a couple of interesting developments.
On Wednesday, the Fed released the minutes from their January meeting with comments which largely bypassed overly bullish investors.
“… several participants observed that equity, corporate debt, and CRE valuations were elevated and drew attention to  high levels of corporate indebtedness and weak underwriting standards in leveraged loan markets. Some participants expressed the concern that financial imbalances-including overvaluation and excessive indebtedness-could amplify an adverse shock to the economy …”
“… many participants remarked that the Committee should not rule out the possibility of adjusting the stance of monetary policy to mitigate financial stability risks, particularly when those risks have important implications for

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#WhatYouMissed On RIA: Week Of 02-17-20

2 days ago

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

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Quick 4-minute review of the markets back to

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Decoding Media Speak & What You Can Do About It

3 days ago

Just recently, the Institutional Investor website published a brilliant piece entitled “Asset Manager B.S. Decoded.”
“The investment chief for one institution-sized single-family fortune decided to put pen to paper, translating these overused phrases, sales jargon, and excuses into plain — and satirical — English.”
A Translation Guide to Asset Manager-Speak
Now is a good entry point = Sorry, we are in a drawdown
We have a high Sharpe ratio = We don’t make much money
We have never lost money = We have never made money
We have a great backtest = We are going to lose money after we take your money
We have a proprietary sourcing approach = We invest in whatever our hedge fund friends do
We are not in crowded positions = We missed all the best-performing stocks
We are not correlated = We are

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After A Decade, Investors Are Finally Back to Even

6 days ago

I recently discussed putting market corrections into perspective, in which we looked at the financial impact of a 10-60% correction. But what happens afterward?
During strongly advancing, and very long bull markets, investors become overly complacent about the potential risks of investing. This “complacency” shows up in the resurgence of “couch potato,” “buy and hold,” and “passive indexing” portfolios. While such ideas work as long as markets are relentlessly rising, when the inevitable reversion occurs, things go “sideways” very quickly.
“While the current belief is that such declines are no longer a possibility, due to Central Bank interventions, we had two 50% declines just since the turn of the century. The cause was different, but the result was the same. The next major market

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Market Believes It Has Immunity To Risks

7 days ago

Market Believes It Has Immunity To Risk
MacroView: Debt, Deficits & The Path To MMT
Financial Planning Corner: Why Dave Ramsey Is Wrong About Life Insurance
Sector & Market Analysis
401k Plan Manager

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Catch Up On What You Missed Last Week

Market Believes It Has Immunity To Risks
As noted last week, the spread of the coronavirus has had little impact on the markets so far.

“”The market bounced firmly off the 50-dma and rallied back to new highs on Thursday. While Friday saw a bit of retracement, which isn’t surprising given the torrid move early in the week, the ‘virus correction’ was recovered. Importantly, sharp early-week rally kept ‘sell’ signal from triggering,“

Chart Updated Through Friday

In review, we

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#MacroView: Debt, Deficits & The Path To MMT.

9 days ago

In September 2017, when the Trump Administration began promoting the idea of tax cut legislation, I wrote a series of articles discussing the fallacy that tax cuts would lead to higher tax collections, and a reduction in the deficit. To wit:
“Given today’s record-high levels of 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 increases in deficit spending to supplant weaker economic growth has been apparent with larger deficits leading to further weakness in economic growth. In fact, ever since Reagan first lowered taxes in the ’80’s both GDP growth and the deficit

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

9 days ago

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

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

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Conversation with Michael Lebowitz and Lance

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Falling Oil Prices An Economic Warning Sign

10 days ago

On Tuesday morning, I got engaged in a debate on the recent decline in oil prices following my report on COT Positioning in the space. To wit:
“The inherent problem with this is that if crude oil breaks below $48/bbl, those long contracts will start to get liquidated which will likely push oil back into the low 40’s very quickly. The decline in oil is both deflationary and increases the risk of an economic recession.”
It didn’t take long before the debate started.
“Aren’t low oil prices good for the economy? They are a tax cut for the consumer?”
There is an old axiom which states that if you repeat a falsehood long enough, it will eventually be accepted as fact.
Low oil prices equating to stronger economic growth is one of those falsehoods.

Oil prices are indeed crucial to the overall

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Technically Speaking: COT Positioning – Risk Of Correction Still High (Q1-2020)

12 days ago

As discussed in this past weekend’s newsletter, the market remains overly extended as the recent correction sharply reversed on expectations for more Fed liquidity. However, with the market extremely deviated from the long-term moving average, a correction is once again a high probability event. 

“Previously, we discussed that we had taken profits out of portfolios as we were expecting between a 3-5% correction to allow for a better entry point to add equity exposure. While the “virus correction” did encompass a correction of 3%, it was too shallow to reverse the rather extreme extension of the market. The rally this past week has reversed the corrective process, and returned the markets to 3-standard deviations above the 200-dma. Furthermore, all daily, weekly, and monthly conditions

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Market Downturn? Putting Corrections Into Perspective

13 days ago

Shawn Langlois recently penned an interesting article:
“Despite a few notable hiccups along the way, the bull market continues to prove insanely resilient.”
What was most interesting, however, was the following quote:
“Current hyper-valued extremes are likely to be followed by market losses on the order of two-thirds of the value of the S&P 500.” 
The immediate response by most individuals is a 60%+ decline is an outlandish and impossible event given ongoing Central Bank interventions.
But is it really?
The risk of a larger mean reverting event is a possibility even though such is entirely dismissed by the mainstream media under the guise of “this time is different.”  With the market trading more than 3-standard deviations above the 50-week moving average, historical reversions have tended

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Market Vaccine For Virus Is More Fed’s “NotQE”

14 days ago

Market Vaccine For Virus Is More Fed
Trust The Process
MacroView: The Next Minsky Moment Is Inevitable
Financial Planning Corner: 5-Things You Need To Know About HSA’s
Sector & Market Analysis
401k Plan Manager

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Catch Up On What You Missed Last Week

Market Vaccine For Virus Is More Fed 
Last week, I asked the question of whether the “correction was over?” To wit:

“On a very short-term basis, there is a potential for a reflexive bounce. If your ‘investment duration,’ or rather your ‘investment holding period’ is very short, there may be a ‘trading’ opportunity for you.”

Well, that bounce came hard and fast during the first half of the week, as the S&P 500 rebounded off the 50-dma to set new highs on Thursday. 

The

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MacroView: The Next “Minsky Moment” Is Inevitable

15 days ago

In 2007, I was at a conference where Paul McCulley, who was with PIMCO at the time, was discussing the idea of a “Minsky Moment.”  At that time, this idea fell on “deaf ears” as the markets, and economy, were in full swing.
However, it wasn’t too long before the 2008 “Financial Crisis” brought the “Minsky Moment” thesis to the forefront. What was revealed, of course, was the dangers of profligacy which resulted in the triggering of a wave of margin calls, a massive selloff in assets to cover debts, and higher default rates.
So, what exactly is a “Minskey Moment?”
Economist Hyman Minsky argued that the economic cycle is driven more by surges in the banking system, and in the supply of credit than by the relationship which is traditionally thought more important, between companies and

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#WhatYouMissed On RIA: Week Of 02-03-20

15 days ago

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

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

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Conversation with Michael Lebowitz and Lance

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Dallas Fed President Sees “No Move” In Fed Funds Rate

16 days ago

Dallas Fed President Robert Kaplan made some interesting comments today on interest rates, repos, and the coronavirus.

Dallas Fed President Robert Kaplan was on panel discussion today at the University of Texas McCombs School of Business on the “2020 Business Outlook: Real Estate and the Texas Economy” in Austin, Texas.

Bloomberg Econoday Synopsis

Dallas Fed President Robert Kaplan is neutral right now on monetary policy, saying neither a rate cut nor a rate hike are necessary in the medium term. “My base case is no movement up or down in the Fed funds rate [in 2020], but I’ll be monitoring [things] carefully … this year,” Kaplan said in a panel discussion.Kaplan believes the outlook for the economy has stabilized and if anything has “firmed”, and though he now has “a more

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SOTM 2020: State Of The Markets

17 days ago

“I am thrilled to report to you tonight that our economy is the best it has ever been.” – President Trump, SOTU
In the President’s “State of the Union Address” on Tuesday, he used the podium to talk up the achievements in the economy and the markets.
Low unemployment rates
Tax cuts
Job creation
Economic growth, and, of course,
Record high stock markets.
While it certainly is a laundry list of items he can claim credit for, it is the claim of record-high stock prices that undermines the rest of the story.
Let me explain.
The stock market should be a reflection of actual economic growth. Since corporate earnings are derived primarily from consumptive spending, corporate investments, and imports and exports, actual economic activity should be reflected in the price investors are willing to

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Technically Speaking: Market Bounce, January, & The Super Bowl.

19 days ago

In this past weekend’s newsletter, we stated the market was likely to bounce due to the short-term oversold condition which existed following Friday’s rout. To wit:

“With a ‘sell signal’ clearly triggered (lower panel), it suggests, on a short-term basis, we are likely to see a ‘tradeable bounce.’ However, until the signal reverses, any short-term bounce should probably be ‘sold into.’
Make no mistake, there is currently downside risk below the 50-dma to both the 38.2% and 50% Fibonacci retracement levels. From recent peaks, such a correction would entail a 5-8% decline, which is well within the normal range of a market correction within an ongoing bullish trend.”

Chart updated through Monday’s close.

The market failed at the bottom of the broken trend line yesterday, which suggests

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The Rotation To Value Is Inevitable

20 days ago

In late 1999, it was stated that “investing like Warren Buffett was the same as driving ‘Dad’s ole’ Pontiac.” The suggestion, of course, was that “value” investing was no longer a viable investment strategy in the new “dot.com” economy where “growth” was all that mattered. After all, in the “new world,” it was indeed “different this time.” 
Less than a year later, investors wished they had adhered to Warren Buffett’s strategy of buying value as the “Dot.com dream” emerged as a nightmare for many unwitting individuals.
However, it wasn’t just stocks either. In 2007, individuals were chasing the “momentum” in the real estate market as individuals left their jobs to pursue riches in housing and were willing to “pay any price” under the assumption they would be able to sell higher. Of course,

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Market Correction Goes Viral, Is It Time To Buy?

21 days ago

Market Correction Goes Viral
Portfolio Position Review
MacroView: Fed’s View Of Valuations May Be Misguided
Financial Planning Corner: What You May Have In Common With Kobe Bryant
Sector & Market Analysis
401k Plan Manager

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Catch Up On What You Missed Last Week

Market Correction Goes Viral
Over the last few weeks, the message from the newsletter has been repetitive:

“The markets are overbought, overextended, overly complacent. A correction is coming so reduce and rebalance portfolio risks.” 

Despite those issues, the markets continued to push higher leaving readers with the assumption the “warnings” were wrong. 
As noted last week, there have only been a few points over the previous 25-years where investors were

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MacroView: The Fed’s View Of Valuations May Be Misguided

22 days ago

On Wednesday, the Federal Reserve concluded their January “FOMC” meeting and released their statement. Overall, there was not much to get excited about, as it was virtually the same statement they released at the last meeting.
However, Jerome Powell made a comment which caught our attention:
““We do see asset valuations as being somewhat elevated” 
It is an interesting comment because he compares it to equity yields.
“One way to think about equity prices is what’s the premium you’re getting paid to own equities rather than risk-free debt.”
As we have discussed previously, looking at equity yield, which is the inverse of the price-earnings ratio, versus owning bonds is a flawed and ultimately dangerous premise. To wit:
“Earnings yield has been the cornerstone of the ‘Fed Model’ since the

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#WhatYouMissed On RIA: Week Of 01-27-20

22 days ago

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

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

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Seth Levine and I dig into the markets, the Fed,

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“SARS” Versus “Wuhan”: The Difference Between “Now & Then”

24 days ago

A week dominated by headlines of a spreading respiratory virus has had investors recalling pandemics past, from SARS in 2003 to the Ebola scare six years ago. While the “Wuhan” virus, or known scientifically as “nCoV,” is still in its infancy, it is closely tracking both the infection and, unfortunately, death rates of the SARS virus.

However, the question everyone wants an answer to is: “what does the virus mean for the markets?”
Will it derail the longest bull market in U.S. history? Or, is it nothing to worry about?

If you read the mainstream media, the answer seems to be the latter. To wit:
“However, gauged by the market’s performance during the onset of other infectious diseases, including SARS, or severe acute respiratory syndrome, Ebola and avian flu, Wall Street investors may

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Technically Speaking: “Coronavirus” Triggers Overdue Market Correction

26 days ago

Over the last few weeks, we have discussed the outsize market advance driven by the Fed’s massive liquidity injections into the market. As we discussed with our RIAPRO subscribers (30-day RISK FREE Trial) we stated:
“If it appears to you that the recent rally is an anomaly, your thoughts do not deceive you. The graph below shows that recent returns divided by annualized volatility (risk) have been running higher than at any time since the financial crisis.
This standard calculation of return per unit of risk is technically called the Sharpe Ratio. The ratio has been sitting around 2.0 for most of January. To put that into context, the current reading is about 4 sigma (standard deviations) from the norm, an event that should statistically occur in one day out of every 43 years. Since

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Retired Or Retiring Soon? Yes, Worry About A Correction

27 days ago

When I was growing up, my father used to tell me I should “never take advice from anyone who hasn’t succeeded at what they are advising.” 
The most truth of that statement is found in the financial press, which consists mostly of people writing articles and giving advice on topics where they have little experience, and in general, have achieved no success.
The best example came last week in an email quoting:
“You recently suggested that you took profits from your portfolios; however, I read an article saying retirees shouldn’t change their strategies. ‘If you’ve got a thoughtful financial plan and a diversified investment portfolio, the general rule is to leave everything alone.’” 
This seems to be an entirely different approach to what you are suggesting. Also, since corrections can’t be

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Market Advance Stalls As Liquidity Begins To Slow

28 days ago

Market Advance Stalls
Portfolio Position Review
MacroView: Elites View World Through “Market Colored” Glasses
Financial Planning Corner: 2-Things Advisors Shouldn’t Do
Sector & Market Analysis
401k Plan Manager

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Catch Up On What You Missed Last Week

Market Advance Stalls
As noted last week, there have only been a few points over the previous 25-years where the market has been so overbought, extended, and bullishly optimistic. To wit:

“This is particularly the case given how extreme positioning by both institutions and individual investors has become. With investor cash and bearish positions, at extreme lows, with prices extremely extended, a reversion to the mean is likely and could lean toward to the 10% range.”

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MacroView: Elites View The World Through “Market Colored” Glasses

January 24, 2020

It is easy to suggest the economy is booming when your net worth is in the hundreds of millions, if not billions, of dollars, or when your business, and your net worth, directly benefit from surging asset prices. This was the consensus from the annual gaggle of the ultra-rich, politicians, and media stars in Davos, Switzerland this past week.
As J.P. Morgan Chase CEO Jamie Dimon told CNBC on Wednesday the stock market is in a “Goldilocks place.” 
Of course, it is when you bank receives an annual dividend from the Federal Reserve’s balance sheet expansion. This isn’t the first time I have picked on Dimon’s delusional view of the world. To wit:
“This is the most prosperous economy the world has ever seen and it’s going to be a very prosperous economy for the next 100 years. The consumer,

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

January 24, 2020

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

________________________________________________________________________________

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

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Lance Roberts & Michael Lebowitz discuss the

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Yes, Rates Are Still Going To Zero

January 23, 2020

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

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Technically Speaking: Extreme Deviations & Eventual Outcomes

January 21, 2020

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

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

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Market Continues “Euphoric” Advance As 3500 Becomes Next Target

January 18, 2020

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

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Catch Up On What You Missed Last Week

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

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

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

January 17, 2020

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

The Week In Blogs

The Best Of “The Lance Roberts Show

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Video Of The Week

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

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Our Best Tweets Of The Week

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

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