Recent Letter to Clients {Part III}

Here is part III of our latest investment letter to clients which was sent to them last week.  Parts I & II were published last Wednesday and Thursday.  The letter was posted in a question and answer format.

How will the elections affect the markets?

Probability suggests that the market is currently pricing in a Clinton Administration.  It also suggests if investors begin to doubt this consensus then markets could be in for some weakness. Investors hate uncertainty.  While Mr. Trump is well known to the business world, Trump as a politician and President is a huge unknown.  We know little about what a President Trump’s economic policies would be and what he has said in this regard so far has been vague and often contradictory.  Whatever one may think of the Clinton’s, Mrs. Clinton has a long history in government.  The business community already has a basic understanding of what a likely Clinton Administration would do in terms of financial affairs and the economy.  One thing that I think has a higher probability of occurring  regardless of who is the next President is more spending on infrastructure.  There seems to be some political will for this in both parties so the next President could have the capital to push this through Congress.  For one thing the country needs it. All you need is to take a look at the roads! Infrastructure spending has also traditionally been a large jobs creation program so it would also be popular.  It might even become more  politically feasible if it becomes part of some sort of “Grand Bargain” linking such spending with a reform of tax policy and immigration reform.

You have talked in the past about seasonal weakness in stocks and I just heard them talking on CNBC about the same thing.  Should I be worried?

In terms of being worried about what happens to the markets, the short answer is that you should always have a portfolio that fits your comfort level and individual risk/reward profile.  We should talk if these criteria have changed.  Market seasonality is a subject on which I’ve written extensively over the years.  The basic premise is that stocks tend to perform poorly around the period of approximately April-October.  I’ve discussed this many times in the past and it is enough of a statistically proven concept for me to say there is a higher probability that stocks will struggle between now and sometime in the fall.  You can click on here to see my explanation from 2012 on why we think this occurs.  Of course, this could be the year that proves to be the exception.  It could be that stocks ignore past history this summer and explode higher.   I think this is a lower probability event given current valuations, but it is not beyond the realm of possibility.

This historical weakness can be further segmented by how markets have traded on average during the April-Autumn cycle.  By looking at trading data over the years you often see the following pattern:  First you typically see a period of weakness in late spring with markets usually becoming over sold by early June.  This is followed by a rally into early-mid July.  Then there is a topping process towards the end of July-early August.  Finally comes a period that is extremely susceptible to a more intense sell-off into the September-October time frame.  Often the market then rallies at least into year-end, but also into the first quarter.  Election years tend to see this pattern more pronounced when Wall Street can’t decide who will be the winner.  Again since I think markets are discounting a Clinton Presidency, a change to this perception could mean that volatility returns to the markets.  Now this pattern doesn’t work every year and I’m generalizing a bit on the dates.  However, there are enough historic tendencies where this has repeated itself year after year that I believe investors need to understand and respect this cycle.

We will conclude this letter tomorrow.

*Long ETFs related to the S&P 500 in client and personal accounts.  Please note these positions can change at any time.

Recent Letter to Clients {Part II}

Below is Part II of our most recent letter to clients.  We are again using a question and answer format.

The market sold off last winter on fears of slower economic growth so why then did it rally this spring?  

A prime reason for the rally was at last winter’s lower prices stocks became attractive to investors.  Markets had by then discounted the fear that the economy was slowing down.  Since then we’ve seen that while economic growth has been anemic, there is still growth.  Right now estimates peg our GDP in 2016 around 2%.  Unemployment is also low and while we can argue about the quality of the jobs being created, more people are working now than at any time since the end of the last recession.   Also last winter the Federal Reserve had just raised interest rates and there was talk of perhaps a series of three or four more increases in 2016.  Stocks volatility and fears back then of slowing global growth led to diminished worries over further rate increases this year.  Recently commentary from “Fed” members has started to suggest rates could rise sooner this year than the market thought.  Not unexpectedly, markets have again become volatile.  However, we will likely now only see 1-2 more interest rate increases this year.  I think a small rise in interest rates would help savers and be a sign that the economy continues on the track to a more sound footing.  If we can't handle the US going from 'basically free" money to "a little less free" money then we're in worse economic shape then we thought.

But I’ve heard on TV because the market is expensive that we could possibly have a really bad decline, maybe even like we saw in 2008.  Does that worry you?

Nobody knows whether we’ll have a large decline or maybe trade higher because nobody knows what the future will bring.  The media darlings and investment folks that emphatically tell you they have all the answers are basically "Show Men".  They are there to provide entertainment.  Those that think they know for sure what's going to happen tomorrow or six months from now are either trying to deceive us or deceiving themselves.  When it comes to the markets there is a debate on whether stocks are expensive or cheap.  There is always that debate.   Nobody knows the answer.  You can outright guess or use probability.  We as a firm prefer probability analysis because it allows us to define odds of what might happen as certain events unfold.  Historically speaking a rapid decline in markets, something akin to 2008, occurs when an unexpected event occurs that catches most investors “off sides” in their risk/reward profiles.  In 2008 for example, the event that pushed the market over the brink was the government’s unexpected decisions to let the investment firm Lehman Brothers fail.  These sorts of things don’t have to be related to finance.  Markets for example rapidly lost about 15% in 1990 after Iraq invaded Kuwait.  Remember these were unexpected events.  These sorts of things may happen tomorrow or never.  That’s why understanding your risk/reward criteria is important.   

What do you think stocks need in order to break out of this current range?

Stocks may need nothing in order to move higher.  It’s impossible to know when the herd mentality takes over and pushes prices above the range.   What I think stocks will need in order to mount a sustained advance is either better corporate earnings or a continuation of the current range until earnings catch-up with valuations on stocks.  What could help on both fronts would be better economic growth.  An economy growing at 1-2% simply doesn’t have the same jets to propel growth the way it would if we were growing around 3%.  3% used to be the default US growth rate.  We now seem to be in an era where economic growth can’t consistently sustain that level.  There are all sorts of reasons being put forward as to why that may be and they are beyond the scope of this update.  I personally believe that technology and productivity advances are changing the economy in ways that are hard to quantify.  The reason for this I think is that we’re still mostly using statistics invented when we were more of a manufacturing based society.  I think economic growth may be a bit better than the statistic suggest.  How that ultimately shows up in both earnings and income is harder to quantify. 

Part III will be published Tuesday.

*Long ETFs related to the S&P 500 in client and personal accounts.  Please note these positions can change at anytime.

Recent Letter to Clients {Part I}

I'm going to be releasing in my next posts my most recent letter to clients.  The question and answer format seems to be popular with readers so I’ve decided to continue with that mode.

Stocks have gone nowhere for some time now.  Why is that?

As a firm, we use the S&P 500 when we talk about “the market” because it is highly representative of US stocks. We can see with the benefit of hindsight that the market has been trending sideways and locked in a trading range since November of 2013.  The S&P 500 has traded roughly within a 15% range over that period.  Included above is a recent chart of the S&P 500’s ETF, SPY.  You can double-click on the chart if you want to make it larger.   I’ve noted and marked two bands, each in yellow on the chart.  The top tier approximately marks the outer limits where stocks have found sellers since early 2015. Investors have said by their trading  up till now that valuations in that upper zone are too high and markets have sold off each time stocks have tested that range.  Slow economic growth and flat corporate earnings have meant that above this shaded area investors don’t seem to find value. At the other end, stocks have found support each time they’ve approached the lower yellow shaded price range. The reason stocks seem to trade higher after each selloff can likely be attributed to historically low interest rates and the belief that there really are few alternatives for liquid assets right now.  Let’s face it, for most investors getting close to zero interest in savings accounts isn’t really that attractive.  The S&P 500 at least right now pays close to 2%, better even than a 10 year US Treasury bond.  Lower rates may be one of the primary reasons stock prices have been able to sustain their current prices.  Also, stocks might not appear to be so expensive if earnings start to accelerate in the coming quarters, which some analysts are starting to suspect might occur.

*Long ETFs related to the S&P 500 in client and personal accounts.  Please note positions can change at any time.

Part II will be posted tomorrow.

Why I Became a Registered Investment Advisor (RIA)

Somebody asked me a while back how I ended up in the investment business. That got me thinking. Today, I wanted to share my story with you. I grew up in a small town in Indiana where my father was an attorney. There, I saw firsthand the power of helping others at a young age. While his practice was law, I realize now that the personal care and treatment he gave to his clients isn’t much different than what I do today for mine. I learned how to work with people from him, including the value of being honest and forthright, even when delivering bad news.

A Winding Career Path

I graduated with a double major in English and Political Science from DePauw University in 1983. I followed in my father’s footsteps and obtained my Juris Doctor degree in 1986. However, when I had the opportunity to work as a stockbroker, my career changed directions from law. I ultimately became intellectually interested in how markets work and designing portfolios geared towards a client’s unique risk/reward characteristics. Early in my career, portfolios were entirely comprised of common stocks. When, as I learned more about other options such as Exchange Traded Funds, I began creating my own investment systems based on these fascinating securities.

After nearly 15 years in the industry, I formed my own firm in 2001. My goal then as now is to offer clients professional investment management of their portfolios. I understand that the investment landscape is changing and strive to build portfolios that take advantage of this new world. I believe personal working relationships are critical to client success. I created Lumen Capital Management, LLC to provide a transparent, structured, and systematic investment process. When people understand the composition of their portfolios and the reasoning behind recommendations, they can feel more confident about their financial future.

Taking Money Management Off Your Plate

As an RIA, my goal is to create portfolios designed how my clients want their money invested; the same way they would if they had the time or expertise to do so themselves. This serves as my firm’s guiding principle as we assist clients in defining, implementing, and managing a customized investment strategy focused on their personal financial objectives. There’s no greater feeling than helping clients reach their goals. I love knowing that I can add value to my clients’ lives.

I’ve now been in this industry for nearly three decades and my passion for what I do has never wavered. I love the markets and the intellectual challenge of investing. I get the same feeling of excitement and wonder every morning when the markets open as I did when I first started in the business.

While I love my job, it’s not always easy. Market volatility is challenging and it can sometimes be difficult to keep clients from making short-term decisions that may hurt them down the road. I view this as a challenge, to help my clients stay on track with their goals and to maintain an open line of communication. My clients will hear from me both in good market times and bad.

How I Can Help

Based in the greater Chicago area, I work with clients throughout Illinois, as well as across the country. Whether you’re based locally or in another state, I’d be happy to speak with you about your investment goals and personal values, and how we can integrate them into a customized portfolio using our investment strategies.

About Me

Christopher R. English is a money manager and the founder of Lumen Capital Management, LLC, a Registered Investment Advisory firm. Specializing in investment management and developing customized portfolios that reflect a client’s values and needs, he has nearly three decades of experience working with individuals, families, businesses, and foundations. Based in the greater Chicago area, he serves clients throughout Illinois, as well as Florida, Massachusetts, California, Indiana, and other states. To schedule a complimentary portfolio review, contact Chris today by calling 708.488.0115 or emailing lumencapital@hotmail.com.

The Long View: Why Retail May Be Hurting.

It seems to have dawned on investors that based on recent retail sales folks don't much like going to the mall anymore as clothing retailers and large chain stores have been taking it on the chin.  I've listened to Wall Street talk about this for the past two weeks.  They've mostly focused on Amazon as the primary culprit.  I do think there's something to being able to sit at your desk and order a shirt as long as you know your size, but I also think there's more going on.  These are my admittedly non-scientific observations about shopping which come from listening and watching what my wife and children all seem to be doing these days.  I'm the last person who anybody could think is an expert in this field because I hate to shop and I'll wear clothing till it falls apart especially if it's comfortable.  With that being said here goes:

1.  What the web has done is educate the public on how not to pay full boat.  People are still willing to shop it seems but they're not willing to pay "retail" anymore.  Go sometime to the relatively new Fashion Outlets of Chicago Mall and you'll see what I mean.  That place is constantly mobbed.  I bought a designer sweater there last winter that would have retailed for $75 for $15.  {05.23.16: 3:45 PM. As an update to this post, I stopped yesterday at a retail outlet mall between Milwaukee and Chicago  just over the state border in Wisconsin.  We arrived there at 4:30 PM and the place was mobbed.    It was a beautiful summer day, the end of the nicest weekend we've seen since last fall and people chose to spend time at the mall.  Don't tell me they won't shop!  I think it's better to generalize that folks likely won't shop unless they get a good deal.}

2.  There is a huge market in high end second hand clothes.  Check out places like Vestiarecollective.com sometime or the many other similar places.  You can find plenty of people making extra cash out of selling clothing they've maybe worn once or twice on the web.  

3.  Etsy.com and other websites offer custom and hand made items for significantly less than what you'd find similar priced pieces at a department or local clothing shop.

4.  For whatever the reason, people's shopping habits have changed.  Somebody who once went to the mall and bought three pairs of jeans now buys one and either that's it or they go home and find the second pair on line.

5.  Millennial's value experiences over shopping.  It seems that for the most part you need a hook in order to get them to the mall.  The Apple stores in malls are always crowded.  So are the fast casual lunch spots out there.  Macy's, not so much. 

Finally go read Danielle DiMartino Booth's latest column over at her blog "Money Strong".  The article titled, "Retailing in America:  Valley Girl {Interrupted}," is not only a fun read but a deeper dive into the problems affecting consumers and shopping right now. 

*Macy's, Etsy and Apple are equites that are components of ETF indices we own in client and personal accounts.  Please note positions can change at anytime without notice.

Thoughts {05.19.16}

The S&P 500 has spent two months going basically nowhere.  It closed on March 18 at 2,047.00 and closed last night at 2,045.60.

Stocks are getting slightly oversold by our work on a short term basis.

Goldman Sachs thinks stocks are going nowhere for the next year.  See here.

Everybody should go read from the Chicago Tribune this article,  "Why Do We Stink at Saving Money? We're Human".  Key Takeaway:

"When it comes to managing our money, being a human being can be downright dangerous. We suffer from two biases when markets are rising: overconfidence in our own abilities to pick winners and optimism, which convinces many investors that they can outperform the market.

Conversely, when markets are diving, we suffer from loss aversion (My dad used to refer to this as the investor line in the sand: "If my portfolio goes below X, I'm getting out!"), which can prompt us to withdraw capital at the worst possible time. When everyone else is selling, there is also a herding effect, when we do what everyone else does. And of course, many investors micromanage their portfolios, whereas, according to Dan, "you will make more money the less you muck around with your accounts."

All of these behaviors help explain why average stock investors lag the S&P 500 index by 1-3 percent annually and active traders often lag by more than 4 percent annually."

The markets sold off yesterday after the release of the Federal Reserve minutes indicated an interest rate increase is more likely in June or July if the economy continues to improve.  Investors hate the idea of higher rates because it brings on more expensive money and makes the dollar less competitive versus other currencies.  Probability suggests at the most we're going to get one or two more rate hikes this year and then we'll be done.  If we can't handle the US going from 'basically free" money to "a little less free" money then we're in worse economic shape then we thought.  Even so, this kind of news is the sort of thing that likely makes that uphill slog for stocks over the next few months a bit of a steeper grade to climb. 

*Long ETFs related to the S&P 500 in client and personal accounts although positions can change at any time without notice.

Valuation {05.17.16}

The S&P 500 closed yesterday at 2,066.61 which is a gain of slightly under 1%  for the year without factoring in dividends. This represents a gain of 3.66% from a market close of 1,993.60 from when we  last reviewed these numbers back on March 8, 2016.    Below is our current valuation analysis.  We are using a current earnings range of $121-124 with a mid-point of $122.75 on the S&P 500 for 2016.  Earnings estimates are unchanged since our last review.    We also use a simple color code to give you some reference for these numbers.  Green will indicate that the valuation on the index on a strictly historical basis has become more attractive from the last time we did this review.  Red will indicate the opposite. 

Our Midpoint S&P 500 Earnings Estimate of $122.75. {Year End 2016}

Current PE:                     16.84 {down from previous review of 16.24}
Earnings Yield:                 5.94% {down from previous review of 6.15%
Dividend Yield:                2.10% {Estimated and down from previous of 2.17%}

Current Expected Price Cone of Probability {COP}:   1,700-2,150.  Market has rebounded from last winter's sell off.

Rolling Four Quarter Estimate for the S&P 500, Our Estimate $123.75:

Current PE:                     16.69% 

Earnings Yield:                 5.98% 
Dividend Yield:                2.15% {Estimated}

The current yield on the 10 year US Treasury is 1.75%.  That is a decline of 10 basis points since the last time we did this review.    

The Cone of Probability {COP} is our current assessment of the trading range within which we think stocks have the potential to trade during the described time period.  It is a probabilistic assessment based on a many factors.  Some of these inputs are: Earnings estimates, also are those estimates rising or falling, dividend yield, earnings yield and the current yield on the US 10 year treasury.  This is not an exhaustive list of all of the variables that are used in creating the cone.  The Cone of Probability is used solely for analytical purposes.  It will fluctuate with market conditions and changes to the data inputs.  Index prices can and have traded outside of the range of the cone.  The data supplied when we discuss the cone is for informational use only.  There should be no expectation that this price range will be accurate and there are no guarantees that this information is correct.

*Long ETFs related to the S&P 500 in client accounts, although positions can change at any time.

Back Thursday.

Chart Talk {05.16.16}

Friday the 13th proved unlucky for stocks.  Lets take a look for our proxy for the S&P 500, its ETF SPY.  Chart is from TradingView.com. {Annotations to the chart are mine.} The numbers below correspond to the same numbers found in red on the chart.  In terms of orientation you are looking at a chart of SPY going back to February, 2014.  It is showing the well  defined trading range the index and by representation the overall market as it has developed since then.  On the S&P 500 the green horizontal line at the top represents ultimate resistance, a level that stocks have been so far unable to clear during this period and the red line at the bottom is support.  That is red represents an area where buyers have turned up each time the market has traded down to that region.  The other horizontal lines  colored blue and orange represent by our work secondary levels of support and resistance.

1.  As usual we'll focus on the fact that SPY once again was unable to clear the bar that's the resistance we've seen form between roughly 208-212 on the index and shaded in yellow on the chart.  By our way of looking at this there's now been twelve times since late 2014 when the markets entered this zone and been unable to trade higher.  The index is trading right now at the same prices first seen back in mid-November, 2014.  It is also now trading below that green downward sloping trendline {1a}which started from the market highs about a year ago now and shows that for the most part the index has continued on a series of lower highs after each market rebound.  The recent rally off of February's lows did violate that trendline,  but as you can see we are again trading again below it.

2.  SPY has now entered into what we define as a secondary level of support and resistance with resistance around 208 and marked by that light blue line and support represented by the licker orange line around 201.  Clues as to future market direction will come by how the market reacts to each of these.  

3.  Keep an eye out for that upward sloping red line marked as 3. on the chart.  That is a trendline dating back to the market lows in 2009.  We breached that line briefly back in February for the first time since the bull market started in 2009 only to promptly turn around and trade higher. However, that line keeps trading up as the market trends sideways and at some point it will bump into current prices unless we start to trend higher.  Traders pay attention to these things so I think it's important that investors at least know what others are watching.  Traders are at some point likely to pay attention to a possible intersection between the green line at 1a and the red line represented by 3.

Market has been working off its overbought condition.  Probability suggests that a few more weeks of this choppy action could set the stage for a classic summer rally if the same trading patterns continue.

*Long ETFs related to the S*P 500 in client and personal accounts although conditions can change at any time without notice.

Catching Up.

So say you're in your 50s now, you've started to do some math about your retirement assets and perhaps that math is a little light on savings.  What can you do?  Use the "catch-up" provisions the government gives you for IRAs and 401(k)s.  The chart above from The Northern Trust does a pretty good job of explaining how much extra you can sock away each year.  You can also delay retiring and accumulate more assets.    The Wall Street Journal ran an article about this today.  This chart is used by Suzanne Shier and the other advisors in the Northern Trust's Wealth Advising group.  Here's what I think is the main point in the article with my highlights.

“Showing people the benefit of making the effort to save a little more tends to be very powerful,” {Ms. Shier} says.For instance, the hypothetical 50-year old 401(k) saver who makes catch-up contributions could have a $1.07 million nest egg at age 65 vs. $925,000 if he or she contributes at the maximum level for younger workers. Continuing catch-up contributions to age 70 could boost that sum to $1.58 million.

Ms. Shier says Northern Trust advisers raise the topic of catch-up contributions with every client approaching age 50. Sometimes, she says, it can make the goal sound less daunting if the adviser breaks down the $6,000 annual 401(k) catch-up contribution into the amount the client would have to set aside from each paycheck—for instance, about $230 every two weeks."

Two-earner couples have twice as much to gain by using the catch-up strategy, adds Ms. Shier."

This is such an obvious investment thing for most people to do that I'm amazed you don't see more written about this topic.  I will say though these calculations get thrown off in a big way if you don't get that 6% growth the chart above assumes is the baseline.  We're all going to have to save more if we are in a 2-3% growth world.  

2-3% growth is something you're going to hear me talk about more as we go forward.  Not that I'm saying that's what we're going to see, but I think it's prudent at this point in the cycle to have a scenario for how you should be investing in case that scenario turns out to be what comes down the highway.  

Back early next week.

Link:  Wall Street Journal {Article was accessed via preview section but may be behind a paywall}.  "Aha! How 'Catch-up' Contributions Boost Retirement Savings"

Chart Talk {05.11.16}

Warren Buffett is in the news a lot this time of year as he usually holds the annual meeting of his holding company, Berkshire Hathaway, in late spring while investors have also had the opportunity to read his annual letter.  Here's a five year chart of Berkshire versus the S&P 500.  The chart is from Yahoo Finance and to be fair I don't know if this analysis includes the returns associated with the S&P's dividends.  The S&P has posted an average yield during this time of about 2% a year while Berkshire pays nothing.  Still my back of the envelope calculation thinks that Buffett comes out on top even if you add those dividends back in.  Whether it's a 63% return or a low 80% return when adding in the likely compounding of the index, Berkshire's 135% return handily trounces the market.

*Long ETFs related to the S&P 500 in client and personal accounts.  Berkshire Hathaway is a component of several ETFs we own in client and personal accounts. 

The Bearish Argument

We try to be fair and give you as many different market viewpoints as possible.  If you would like to read a negative view on equities go read over at Zero Hedge Stan Dxuckenmiller's presentation from the Sohn Conference last week.

His view is not necessarily the way I see things but I want you, my readers, to see as many different opinions as I possible so I'm passing his presentation on to you. 

Link:  Zero Hedge: "Stan Druckenmiller This is 'The Endgame'-His Full Apocalyptic Presentation."

Back Wednesday.

Themes

I'm going to introduce another new category on the blog that for now I'll call "Themes".  These are basically foundational ideas that can either form the basis of an investment or trading thesis.  These are classified in my mind more as "big picture ideas" than actual investment theses, however, they may be the foundations on which investment portfolios and strategies might be built.  Here are some of the things that have been running through my mind.  I'll categorize these in terms of time: short term thoughts {days to weeks}, intermediate [weeks to months}, durational, something that is in between and intermediate and longer time frame and longer term which will be themes that have the potential to last many years.  These are just short form note today, although some of these I think  maybe I'll explore in more detail over the coming weeks and months.

Short term:

Market has again been repulsed in that zone of resistance we've highlighted again and again, most recently here.  Market is also overbought by many of our measurements.  Seasonal factors may now come into play.

Intermediate Term:

I think there is a higher probability of increased volatility between now and the election.  Market will now have to come to grips that Mr. Trump has secured the Republican nomination.  The markets will factor in that Mrs. Clinton is the prohibitive favorite to win.  Anything that causes that thesis to be doubted could possibly lead to increased negative volatility.  Likewise, data that suggests the Clinton Presidency is intact could lead to positive market responses.  

A vote by Britain to leave the EU is likely to be viewed by investors as a negative event.  In that vein markets are not factoring in much of a possibility for a negative event overseas.

Intermediate to Longer Term:

The last act of the "Great Recession" is now coming into play as governments of all stripes have to admit that their debt burdens are unsustainable and the promises that have been made to citizens and pensioners cannot be entirely kept.  We have seen this already in Detroit, now Puerto Rico and are beginning to see the "own up" phase happen in Illinois.  Overseas places like Venezuela are seeing their economy in meltdown.  Part of the reason that Cuba is willing now to open up to the United States is that it needs the influx of foreign dollars.

Longer Term:

There is a higher probability that whoever is the next President will undertake a massive stimulus program in order to jump start the economy.  I'm thinking something in the trillion dollar realm over perhaps a 3-7 year period.  It will be harder to justify the spending we are doing overseas without doing some additional stimulus at home.  Both a President Trump or a President Clinton I believe will have the political capital to do this.

Investors should use much more conservative investment assumptions looking out over the next five years or so than I believe most choose when doing financial planning.  I think investors should use 2-3% gains when making longer term financial plans based on where we currently sit.  I'm not saying that's what we're going to get in terms of actual returns over time.  Returns could obviously be higher or lower.   This is my simply current view of what I think folks ought to use when doing the analysis.  Probably means we're all going to have to save more money than we'd like, particularly those of us entering that 10-12 year window prior to retiring.  Definitely more on this at a later date.

It's very likely that we're going to come out of this election with more than two viable political parties.  The cleavage between the Trump faction of the GOP and it's traditional constituencies may be too hard to repair while a probable Clinton win may only mask the deeper divisions between the progressive wing of the Democratic party and its more moderate elements.  If I had to bet I'd say that a political party emerges that appeals mostly to the middle elements in American society.  It would be more socially moderate then the current Republican party and more fiscally conservative than the progressive wing of the Democratic base.  Will be fascinating to see how this pans out.

Back Monday.

Go Read.

I know I said I wouldn't post until tomorrow but I'll be brief and say that you should go read over at Institutional Investor.com, "Death and Taxes:  Ben Franklin and Wealth Management".  It points out in a comprehensive and easy to understand way the performance drag taxes produce for individuals.

And per my column a few weeks ago on the high probability of Mrs. Clinton becoming President, see this Chicago Tribune article basically coming to the same conclusion I did via the Electoral College.

The Market Cycle Explained In A Picture

According to VisualCapitialist.com there are four phases to a market cycle:

Accumulation
Markup
Distribution
Decline.

Go to the link listed below for the definitions of each.

Link:  This Market Cycle Diagram Explains the Best Time to Buy Stocks.

Back Thursday.

Chart Talk {S&P 500-Weekly Chart}

Here's that longer term chart of the S&P 500 ETF, SPY.  I like looking at weekly charts because they give you a longer term perspective of whatever you're researching.  Here you can see how far we've come since the 2009 lows, how we've stayed above trend {the red diagonal line you see moving higher from left to right} and that zone of resistance which I've shown here in yellow.  

Chart is from TradingView.com.

*Long ETFs related to the S&P 500 in client and personal accounts although positions can change at any time.