Time to Be Defensive

With the increase in interests by the Fed, there is a high probability there will be a recession soon. In 12 of the last 13 Post WWII times the Fed raised interests rates to cool the economy,  a recession followed.   So history says the is a 92% chance the Fed has gone or will go too far raising interest rates and cause a recession.

Knowing this, there are three actions I could take:

1. Sell everthing and go to cash.   This would completely protect principal, but the challenge will the deciding when to get back into the market.
2. Reduce equity exposure.  This keeps me invested if the market makes a sharp advance, but reduces the impact of a decline.  Also, cash is raised that can be reinvested when the market declines.
3. Increase allocation in defensive stocks.   Find good dividend paying stocks or defensive sectors such as consumer staples or utilities.  The investments will go down, but not as much.  In addition, the dividends will create a stream of income if needed

For us, I will be using approach number 3.   Due to the recent market decline, there are a number of very good dividend paying stocks that experience signficant price declines.   Some of these stocks are paying 4, 5 or even 6% dividends.   

Here are some exmaples of the defensive stocks we own and are buying more:  AT&T (T), Williams Company (WMB),  Phillip Morris (PM),  Altria (MO), Exxon (XOM),  Coty (COTY), and Western Digital (WDC).

Disclosure:  At the time of posting, we own shares of T, WMB, PM, MO, XOM, COTY, and WDC.

For more on The Practice of Personal Finance, check back Wednesdays for a new segment.

This is not financial or investment advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

All News is Bad News

Lately, it seems that any and all news causes the stock market to decline.  Probably what ever the Fed does tomorrow will do the same. 

• Raise interest rates - This is the most likely scenario.   The stock market will view this as too aggressive since the economy is already slowing down and heading towards recession.   Even with a dovish 2019 forecast, an interest rate increase will be viewed as too hawkish.  Result - the market declines.
• No change to interest rates - This is a possibility.   The stock market will view this as an acknowledgement the Fed has already raised interest rates too much and is concerned about causing a recession.   Result - the market declines.
• Lower interest rates - This is unlikely.   The stock market will view this as a recession being imminent.  Result - the market declines significantly.

12 of the last 13 times the Fed raised interest rates, a recession occurred.  The market knows this and that's why all the Fed news tomorrow will be bad news for the stock market.

For more on Ideas You Can Use, check back Tuesdays  for a new segment.

This is not financial or investment advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

Selling the Bounce

If a recession is forthcoming, as the stock market seems to indicate,  we are probably already in a bear market.  However, there can be significant rallies even in a bear market.  So as a precaution, I plan to sell a portion of our holdings with each market advance.   If I'm wrong, I will still have core holdings that will gain.  If I'm right, I'll be taking some profits that will offset the losses in the core holdings. 

I'll know by the end of 2019 if this was the right strategy, or if I should have just kept a buy and hold approach.

For more on Strategies and Plans, check back every Monday for a new segment.

This is not financial or investment  advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

Opening a Roth IRA for our Daughter

This year, our daughter started her first job, reffing kid's soccer games.   The pay was good, about $15/hour.   Between reffing and plant watering, she earned $295 this year.

Since she has earned income this year, our daughter can contribute up to $295 to an IRA, either a Roth or Traditional (deductible) IRA.   Since her earnings are below the $1050 standard deduction for dependents and below $433 threshold for self employment taxes, our daughter doesn't not owe any income nor self employment taxes.  She also does not owe any state taxes.  Therefore, contributing to a Roth IRA is best since the earnings are tax free when withdrawn and there is no deduction benefit for contributing to a Traditional IRA.

To make the decision easy for our daughter, I will gift $295 to her to open the Roth IRA.  That way she can keep the money she earned and still start a retirement saving account. 

For more on Crossing Generations, check back Thursdays for a new segment.

This is not financial. investment, savings nor tax advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

Group Contributions to Reduce Taxes

With the increase in the standard deduction to $12,000 single, and $24,000 married filing joint, many taxpayers will no longer need to itemize and, therefore, not be able to deduct charitable contributions.

If one makes significant, but not large enough to be deductible, contributions, a way to achieve deductibility is to group multiple years together and cover it with a contribution in one year.   Another way is to make a single large contribution to a charitable fund and then distribute it over the next few years.

For example, one could group 3-4 years for church contributions and make the contribution in a single year.  Or one could make a single large contribution to a charitable fund and distribute the annual amounts over several years.   In either case, the deduction would the full amount contributed in one year, to the fund or to the organization.

So in one year, the taxpayer would take a large charitable contribution deduction that puts them over the standard deduction threshold.  In the non contribution years, the taxpayer would take the standard deduction.

For more on The Practice of Personal Finance, check back Wednesdays  for a new segment.

This is not financial or tax advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

What Will Cause the Next U.S. Recession?

This video by Gary Shilling shares that recessions are caused by either the Fed raising rates or financial shocks.  While Mr. Shilling doesn't see any major financial shocks, except perhaps emerging  market dollar denominated debt, he does think the Fed raising rates is a good possibility.

The inversion for the yields of the 3 and 5 year treasuries my be the first indication of a Fed induced recession.  The good news is that a recession usually doesn't happen for about 24 months after this inversion.  So there is still time to reduce exposure to the stock market.

For more on  Ideas You Can Use, check back Tuesdays  for a new segment.

This is not financial or investment advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

Waiting for the Yield Curve to Invert

A 2yr/10yr yield curve inversion has preceded every post WWII recession.  However, not every inverted yield curve was immediately followed by a recession.  Even so, a recession typically doesn't happen until 9-24 months after the yield curve inversion.

Basically, the yield curve inverts when the 2 year yield is higher than the 10 year yield.  This means that investors are expecting the economy to be better near term than in the long term, and therefore, are willing to take lower yields long term.

Here are couple articles on the phenomenon.   Inverted Yield Curve and How It Predicts a Recession  and Inverted Yield Curve? Recession? Not So Fast

Based on this indicator, I will assume market declines are corrections and not the beginning of a bear market, until the yield curve inverts.   Thus, I will maintain our core holdings and only trade the peripheral holdings.   However, once the yield curve inverts, I plan to sell and reduce our core holdings in preparation for a significant market decline.

At this point, the 2yr/10yr yield curve is flattening but still not inverted.  So we will continue to keep our core holdings while trading the peripheral holdings.

For more on Strategies and Plans, check back Mondays for a new segment.

This is not financial or investment advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

A December to Remember

"The market moves in the direction that causes the most pain." ~ Wall Street adage

To me,the most pain would if the market advances 5-10% or more in the month of December.   That would cause a lot of hedge funds, pundits and some individual investors a lot of pain.   Then the algos will likely kick in and add more fuel to the advance.   That would lead to the FOMO (Fear of Missing Out) advance before the market would reach a near term top.

I know of hedge funds and individuals that have either sold most of their equities or are short the market.  An advance of 5-10% in a month would cause enormous pain.  Similarly, a drop of 5-10% would cause elation among this group.

The setup is in place for a great December:

• Seasonality - Historically, December is the third best month for stock returns, and well know for the Santa Claus rally.
• Interest Rates -  The Fed is likely to slow down interest rate increase in 2019.
• Trade Wars - Trump has announced a short truce in the tariff wars with China.

My target for the S&P is to reach 3000 sometime in December.  I'll even go out on a limb and predict a 2018 close for 3000 or more.

For more on New Beginnings, check back Sundays for a new segment.

This is not financial  or investing advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

Year End Rally? Or Not.....

In August 28, 2018, I posted an article that predicted the market would close higher by the end of the year.  The S&P was at 2897 on that date.  While a new high we achieved in September, the S&P is lower at 2760 at the end of November.   To close higher at the end of the year, the S&P would need to advance a minimum of 5% (140 points).      Here are my thoughts on the likelihood of a 5% or greater advance by the end of December.

Here are the key factors:

• G-20 Meeting and China/U.S. Trade Negotiations.  President Trump's stance on the China/U.S. Tariff/Trade negotiations will have the most impact.   A hawkish view will cause the market to decline.   A deal making view will lead to a market advance.  The pundits are leaning towards a negotiated delay in tariff implementation, which would be a positive for the market.
• Fed Meeting.  The December 17-18 meeting is expected to result in another quarter point interest rate increase.  However, the Fed is expected to reduce the number of increases in in 2019.  This would be a positive for the market.
• Algorithmic Trading.  Depending on how computer algorithms react to the G-20 meeting, Tariffs/Trade negotiations, and the Fed Meeting, the market could move sharply up or down. I believe the algos will buy based on the positive outcomes above.

 Currently, there is a lot of pessimism about the market.  I know people that are mostly in cash or even taking bearish short positions.   If the market starts advancing, people will need to reverse their positions.

So right now, I still expect a year end rally and a new record before the end of the year.  Of course, that could change once President Trump tweets about the status of trade talks with China.

For more on Reflections and Musings, check back every Saturday for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

My Strategy for Election Outcomes

"Elections have consequences...." - President Barack Obama, three days into his first term.

I've been thinking about impact of possible midterm outcomes on the stock market.     Here are my conclusions for the scenarios in order of likelyhood:

• Scenario 1:   Democratic majority in the House, Repblican majority in the Senate.  I expect the stock market to continue upwards since Wall Street will expect gridlock.   However, President Trump may use the opportunity to cut more deals with Congression Democrats, which will require more spending and increase the deficit.    That will lead to a signficant decline in the stock market.
• Scenario 2:   Republican majority in both the House and Senate.    I expect the market will continue to volatile, but have a directional upward trend.    There will continue to be signficant uncertainty in economic and foreign policy.
• Scenario 3:   Democratic majority in the House and Senate.   I expect an initial drop in the market, followed by short rally.   After that, the market action will depend on how intense the gridlock becomes.   Signficant gridlock will result in a signficant market decline.

Since I believe Scenario 1 is the most likely, I will be staying invested until 2019, using the tradable ralllies to take some profits and reducing our equity exposure for a possible decline/correction in early 2019.

For more on Strategies and Plans, check back every Monday for a new segment.

This is not financial or investment  advice. Please consult a professional advisor.

Copyright © 2018   Achievement Catalyst, LLC

Lots of Fear and No Exuberance

This continues to be the most unloved bull market ever. 

Almost everywhere in the market has the smell of fear.   Fear of  rising interest rates.   Fear of declining corporate earnings.   Fear of geopolitical events.   Fear of recession.   Fear of being invested in the market.    In fact, the amount of fear is more indicative of a market bottom than a market top.

On the other hand,  there is almost no exuberance.  No excitement about stocks.  No excitement about being invested.   No stories of fortunes being made on investments.   The reality is that no one seems interested any more. 

I know more people getting out of the stock market than adding funds.   From a contrarian perspective, this probably signals the beginning of a new advance and not the beginning a of significant decline.

For more on New Beginnings, check back every Sunday for a new segment.

This is not financial or investment advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

The End ... or The Beginning?

I am getting more concerned about a significant decline in the stock market occurring.  Part of the concern is data based due negative market trend of the past two weeks.   However, I admit part of the concern is emotional since our only income is based on investment returns.  So any declines in our investments are causing anxiety.

The rational part of me says stay invested in the market.   The economy is good and there are no reasons to expect an imminent recession.   The decline is a correction and the market will likely begin another advance.

The emotional part of me says I need to protect my retirement savings.   Having lived through the 08/09 bear market market, I don't want to risk such a loss again, which was about 40-50%.  The decline may be the beginning of a brutal bear market.

So is this the end of a great bull market or the beginning of the next leg up?  Right now I am torn and can go either way.  We'll see how this week goes.

For more on Reflections and Musings, check back every Saturday for a new segment.

This is not financial, investment or retirement advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

Buying Junk Silver Coins

Recently, we found a coin dealer that sells "junk" silver coins very close to spot silver prices.   Junk silver describes coins that have no numismatic value over the value of the silver it contains.   Generally, these are Roosevelt dimes and Washington quarters minted for circulation up to 1964.  With the decline of silver prices, soon I expect to be able to purchase these coins at 10 times face value.  So a dime would cost $1 and a quarter would cost $2.50.   A bonus is that our state does not charge sales tax on coin and bullion sales.

Here are some of the advantages of this approach:

• Enjoyment.   I collected coins as a kid and found many silver coins in change.   I can add to my missing dates in the collection, although at higher than face value.
• Liquidity.   Very easy to buy and sell.  If the prices goes up, I can sell small amounts to coin dealers or individuals.
• Hedging.   If inflation returns, the nominal value of US currency will go down, but the value of these coins will increase.

I plan to buy about $100 dollars worth of junk silver coins each month for rest of this year.  

For more on New Beginnings, check back every  Sunday for a new segment.

This is not financial, numismatic, or investment advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

Trump Is Great for the Stock Market

Yesterday, I posted Why Obama Was Great for the Stock Market.  IMHO, Trump is great for stock market for the same reason, there is no sign of exuberance.    In fact, this market continues to be the most unloved bull market ever.   However, the cause it different.   In Obama's case, it was the administration's policies.  In Trump's case, it is his unpredictability and impulsiveness.   Many pundits, professional investors and retail investors are quite sure that the market will crash soon, which is keeping the market from being overheated.

So despite being the longest bull market ever, I expect the stock market to continue to grind up 10-20% to new highs by the end of the year.

For more on New Beginnings, check back every Sunday for a new segment.

This is not financial or investment advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

Why Obama Was Great for the Stock Market

The stock market gained over 200% under President Obama, one of the best advances during a presidency.   To me, Obama's greatest contribution was his policies kept the stock market (and the economy)  from becoming overheated.   The business community did not over invest.  So it was the slowest ever recovery from a recession. 

In hindsight, the slow recovery has been a great positive.   None of the short cycle boom busts that typically occur.   Just a continuous steady upward trend, with periodic brief pull backs. 

I guess steady economic growth requires a balance of strong economic results tempered by near term economic uncertainty.

For more on Reflections and Musings, check back every Saturday for a new segment.

This is not financial or investment advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

Everything is Leaking

When it rains, it pours. ~ old adage

About six months ago, I noticed a leak under my F-150 truck.   At first, I thought it was my transmission, but it turns out it is the oil pan gasket.  Then I find out our hot tub is leaking water, about several gallons a day.  Then, this weekend, it appears that our in ground sprinkler system has started leaking.

Arrgh!

I guess I will have higher repair expenses than usual for the rest of the year.

For more on  New Sunday for a new segment.

This is not financial nor repair advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

Purchased a CSA Share

From late Spring to early Fall, we do some of our grocery shopping at the local farmers markets.   This year we decided to purchase a biweekly CSA share from a local farm.   We have been enjoying the service for the following reasons:

• Delivery - It comes to our door every two weeks.   
• Variety - There are around 10 different fruits and vegetables.
• Good quality - All the items have been as good as those we hand pick.
• Cost - It is $40 for each delivery, about what we would spend a grocery store
• Surprise factor - We usually get one or two items that we wouldn't buy, in addition to the staples we usually eat.

At this point, we expect to continue buying a CSA share next season for the same delivery cycle.

For more on New Beginnings, check back every Sunday for a new segment.

This is not financial nor shopping advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

Looking for the Next Big Winners

Ten years ago, I didn't expect Netflix or Amazon to be the big winners that they are today.  If I had bought and held, we'd have significantly more in our are retirement savings accounts.

So I thought I would try to identify companies today that may be big winners 10-20 years from now.  My hypothesis is that small/mid capitalization companies that use tech to better serve a convenience oriented, home oriented consumer will have the  potential to be big winners.   

My initial picks that meet the criteria are:  StitchFix (SFIX), Shopify (SHOP), Grub (GRUB), Baozun (BZUN), IQIYI (IQ), and Twitter (TWTR).

I have also chosen stocks of companies that provide the technology:  Zuora (ZUO), Square (SQ)

My dark horse pick is Kroger (KR).

At this point, it is unclear which or whether any of these will become big winners.    In fact, some of these companies may become unsuccessful.   So I have bought all of them, with the hope that one will be come a star.

I will also continue to look to buy additional stock in companies that meet my criteria.

Disclosure: At the time of posting, we own shares of StitchFix, Shopify, Grub, Baozun, IQIYI, Twitter, Zuora, Square, and Kroger.

For more on Reflections and Musings, check back every Saturday for a new segment.

This is not financial nor investing advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

Articles Predicting Further Gains for the Stock Market

Here are two interesting articles from CNBC and Marketwatch on why the S&P is likely to be up from now at the end of the year.

https://www.cnbc.com/2018/07/31/the-sp-is-doing-something-it-hasnt-done-since-eisenhower-presidency.html

https://www.marketwatch.com/story/the-fate-of-the-stock-market-for-2018-could-rest-on-the-next-5-trading-days-2018-07-24

The indicator has been right 100% of the time since 1935.  Of  course, past performance does not guarantee future performance.  But I'm betting this year doesn't break the streak.

For more on  Ideas You Can Use, check back every Tuesday for a new segment.

This is not financial nor investing  advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

Sticking to the Investment Plan

Staying invested since the end of January 2018 has been tough.   The correction was longer than average, there was a lot of geopolitical concerns, and there were growing legal issues for the Trump administration.  During that time, the market was a roller coaster, with seemingly more dips that rises.   It was hard, but I bought cautiously during the dips, even when the market kept going lower.

Now that the correction is officially over (as of last Friday), all the anxiety and commitment has paid off.  We've increased our investments in equities by around 25%.  Most of the increase was adding to current positions, but I did initiate some new positions.     With the recovery, most of the purchases now have positive gains.  A few, like TWTR and IQ, are still below my average purchase price.  However, I do expect these to recover in the next few months.

My forecast for the S&P index is that is will be up 10% from Friday's close before 2019.  My plan, at this time, is to maintain about the same level of investment through the end of the year.

Disclosure:  We own share of TWTR and IQ at the time of posting.

For more on Strategies and Plans, check back every Tuesday for a new segment.

This is not financial nor investment advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

College Savings Plan Adjustment

Our College 529 Plan made two adjustments for 2018.

First, the amount that can be deducted from income has been increased from $2000 to $4000 per year for each beneficiary.   We can take a state tax for contributions up to $4000.    So we will be increasing our contribution from $2000 to $4000 for each beneficiary. 

Second, per federal and our state regulations, College 529 Plan funds can be used for expenses in K-12.   Since we paid over $3000 in tuition for full day kindergarten in public school, I am considering using the 529 plan funds to cover this cost.

Some argue that it is inefficient to use 529 funds for K-12 since there is a reduction of funds for college.  To address this issue, I plan to pay the funds to the student (beneficiary), who can then invest the funds.  The growth in these funds will be tax free since the beneficiary is a minor dependent and can earn up to $900 per year with no taxes.

Of course, funds in the child's name will reduce financial aid packages, but we expect to receive very little needs based aid at this time.

For more on Crossing Generations, check back every Thursday for a new segment.

This is not financial, investment or eductation advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

Mildly Optimistic

It's had to be optimistic about the stock market with all the negativity swirling about.   However, that's probably the time to tough it out and stay invested.   

I have mixed feelings.   I believe the market will be significantly higher by year end, no matter what the outcome of the midterms.  If the Democrats win, the market will go up; if the Republicans winn, the market will go up.  But I believe August will be a volatile month, perhaps even being a down month.

It is a bifurcated stock market, with a lot of rotation.  Some stocks are going up, while others are going down, resulting in a slight rise in the indices.

So I will take some profits in advancing stocks (which means they will probably advance further:-)   And I will buy some short term beaten down stocks, e.g. Chinese internet stocks, biotechs.   I expect that the stock market may be a bit of a roller coaster, and be prepared for slow rises and quick drops.

For more on Reflections and Musings, check back every Saturday for a new segment.

This is not financial or investment advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

Free Medical School Tuition

NYU, a top ten medical school is offering free tuition to all its students beginning this year.   That will eliminate a significant financial burdens.  Students' only cost will be room and board, which is a normal cost of living.

For more details, see this CNN article.

This is great news for those interested in becoming a doctor.    If this were an choice when I was graduating, I would have given the option strong consideration.

For more on  Crossing Generations , check back every Thursday for a new segment.

This is not financial nor education advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

Betting With American Exceptionalism

"Don't bet against the U.S." ~ my late father-in-law

In 2009, my late father-in-law commented that he was staying in U.S. stocks because he believed the U.S. would do well recovering from the Great Recession.  He was right.   Today, I still think his point of view is still valid.   The U.S. will do well because of the exceptionalism of its individuals.   I will continue to stay invested in the U.S. economy and the companies, despite all the naysayers.

For more on The Practice of Personal Finance, check back every Wednesday  for a new segment.

This is not financial or investment advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

Scaling Into a Trending Up Market

Over the next few weeks, I plan to scale in the remaining additional funds into our different investment strategies.   Since the end of January 2018, I've been scaling into the dip.   In most cases, this has been a profitable approach.   Although I started purchases at higher levels, I have also made several purchases, hopefully, near the bottom.   In many cases, the short term bottom has already happened.  In a small percentage of stocks/strategies, the price/valuation is still finding the bottom.

At this point, I believe the correction is over and the market may soon cross new highs.  Rather than wait for the next correction, I plan to invest the remaining funds as the market advances.   However, I will do this by scaling in (buying small lots over time), just in case the market pulls back before making its next advance.

For more on Strategies and Plans Ideas, check back every Monday for a new segment.

This is not financial or investment advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

Stock Market Breakdown ... Or Breakout?

It's been a little over 6 months since the most recent correction began in January '18. I know some still believe the market is in correction and will test the previous lows and may even breakdown.  However, with the market only about 3% below previous highs the recent correction possibly ended in March '18. 

Since the average time for a correction to reach a new high is 4 months (which is the end of July '18), I'm thinking there is also a good possibility of a breakout.  In my opinion, the market is more likely to advance over 3% than decline 8% in the next few weeks.   

.Breakdown or breakout?  I planning on a breakout.

For more on New Beginnings, check back every Sunday for a new segment.

This is not financial or investment advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

Why This Bull Market Can Continue

"The reports of my death are greatly exaggerated." ~ Mark Twain

Recently, there have been an increase of articles cautioning the end of the bull market.   The reasons are numerous:  the longevity, PEs, increasing interest rates, narrowing breadth, geopolitical uncertainty, and, of course, Donald Trump, whose actions extends the list of specific concerns further.

It is a great list of concerns.   However, I think the opposing view, that the bull market can continue, has merit also.

• This is the slowest post WWII economic recovery.  One would have expected a steep recovery given the depth of the recession.  However, the slow recovery may be delaying a future recession since business have not yet over invested and created excess capacity.
• Businesses are still cautious.   Most businesses seem to be still under investing and cutting costs, especially the industrial ones.   No one seems expect an economic boom. 
• Still a great deal of pessimism.  Almost everyone I know thinks this bull market is unsustainable will end.  And there has been a increase in people predicting the onset of a bear market since the election of Donald Trump.  Bull market die when there is excessive optimism and irrational exuberance, neither of which are evident at this time.
• Finally, it is questionable whether this bull market started in March 2009 (bottom of bear market), March 2013 (crossed previous high), or Feb 2016, (the latest major correction).  So this bull market may not be that long in the tooth.

My sense is that this market is still intact, but may be vulnerable to a significant external event.  But until then, this bull market can continue.

For more on  Reflections and Musings, check back every  Saturday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

Resigned to a Progressive Takeover

In 2016, I was resigned to Hillary Clinton being our President for the next 8 years.   No way that Donald Trump could win.   Imagine my surprise when I woke up at 2AM to Donald Trump in the lead.

Similarly, I am resigned to the Democrats retaking the majority in the Senate and the House in the 2018 midterms.   

For more on  Reflections and Musings, check back every Saturday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

Is 2018 Analogous to 2008 or 2012?

Currently, I wrestling with whether the volatility and lack of market conviction is more like the 2008 market or the 2012 market.  Early 2008 preceded the Great Recession in late 08 to 09 and 2012 preceded the Great Melt Up of 13. 

Right now, I am leaning towards 2012.    However, in 2008 I also was expecting a recovery in the market, which didn't happen.

So right now, I am expecting a melt up, but won't be too surprised if there is a major downturn either.

For more on Reflections and Musings, check back every Saturday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

Why Some Bricks and Mortar Retail are Losing to Amazon

I'm old fashioned.  I prefer to go to a store to touch and feel what I buy.   I have never ordered through Amazon.   The few times I have ordered online was because the item wasn't available at a local store, or it was much cheaper than the local appliance parts store.  Otherwise, I drive to the store and buy the part.    As background, we live in an area where just about every major retailer is within a 2-3  mile radius.  The main exceptions are Sears, Nordstrom and a few other mall anchors.

So one of my home projects is the highlight in gold the raised letters on our address plate.   Based on searching,  the ideal solution was an oil paint Sharpie.  According to my search, a big box retailer had the product and the lowest price, about half the price of Amazon.  I checked and they had two in stock.  I called, and they said they had three in stock.   I decided to pick it up on the way back from dropping our daughter off at lessons.

The next morning, I showed up 1.5 hours after opening.  It wasn't available on the shelves.  And the price was twice as much  I went to customer service to check, who confirmed they would honor the internet price. Their system said there were 2 in stock.  They sent someone to pull it, but she said there were none available.   I asked to order and pay for it.  They said they could only charge me for physical items at the store.

So I went home, created a store account (as required) and ordered the product to pick up in store.   An hour later, I received an e-mail that said the item was not in stock.   However, they offered free shipment as a solution (or choosing a store that was 10 miles away).  I took the free shipment option, but will have to wait until this weekend to get the item.

I did complain to the retailer about the inaccuracy of their "in stock" info.   They gave me a stock answer, which I accepted but knew it was covering for the inefficiency of their stocking info.   But I did let them know that I felt like I should have been better helped since I was actually in their store. 

I will still choose to go to the store; but for this retailer, I will order online to make sure it will be at the store when I go there.

 For more on Crossing Generations, check back every Thursday for a new segment.

This is not financial, investment or shopping advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

My New Perspective on Personal Belongings

I was scanning the Internet for some used skis/boots/poles for the kids and came across a estate auction site.  I was shocked to see the low current bid prices on items such as hand made Persian rugs.  The bids were as low as $1, although there was still 2 days left to bid.

So I have concluded that almost everything I own is depreciating and will be worth almost nothing if I sell them.  Very disappointing, but probably will lead me to think differently about how I spend my money on material things: Maybe owning stuff is not such a good idea....

For more on New Beginnings, check back every Sunday for a new segment.

This is not financial or investment advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

A Potential Last Hurrah Retirement Job

Recently, I was thinking that a great last hurrah, short term,  retirement job would be to work for the President of the United States.  Then I saw this article that the Trump Administration is having a job fair.  So I might apply for a position.

I'm not looking for anything long term, so this may be a perfect fit :-)

For more on  Reaping the Rewards , check back every Friday for a new segment.

This is not financial or job  advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

Doubling Income is Life Changing

In his book Factfulness, Hans Rosling makes the point that for people in Level 1 of extreme poverty (living on less than $1 per day) a dollar, an increase in income is life changing, noting that a $1 increase income per day would make little difference to people in Level 3 and 4, the upper half.   However, he did comment that a doubling of income for people in these level's would also be life changing.

His comment got me thinking that maybe I need to revise my financial goals to doubling my income over a specific time, say every 10 years on average.  So after 30 years, I would have 8 times my starting income. 

This approach may cause me to rethink our investment strategies.

For more on Ideas You Can Use, check back every  Tuesday for a new segment.

This is not financial or investment advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

Investing in a Coccoonng Theme

It seems to me that businesses that enable people to get things done without leaving home are doing very well.  Examples include:  Amazon (shopping); Facebook, and Twitter (Social Connections); Grubhub (eating out); and Netflix (entertainment).    I may start an account devoted to this theme and invest accordingly.

Disclosure:  We have positions in Amazon, Facebook, Grubhub and Netflix at the time of this posting.


For more on New Beginnings, check back every  Sunday for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

My Latest Reading

Factfulness by Hans Gosling is a book everyone should read, especially those with liberal or conservative viewpoints.  The basic theme is the world is better than we think it is and our cognitive biases make us think it is worse. 

I read it because it was the one book Bill Gates recommends to read in 2018.    It is causing me to rethink some of my investing view points.




Disclosure: No compensation was received for writing this post.   This receives compensation if a purchase is made via an Amazon link on this site.

For more on  New Beginnings, check back every Sunday for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

A Success Sequence

When I was growing up, my parents, especially my mom, emphasized going to college, getting a good job and getting married before having kids.  Recently, I read that doing it in this order is has been called a success sequence, based on research by the Brookings Institute.

Actually, the Brookings Institute study specified graduating from high school, so I guess my parents were a little ahead of their time.

Anyway, I hope to instill the same sequence in the minds of our kids.  While, it does not guarantee success, it sure does improve the probability.

For more on Crossing Generations, check back every Thursday for a new segment.

This is not financial or parentingadvice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

Taking Advantage of Volatility

"Buy the dips, sell the rips." ~ Wall Street Adage

With the current volatility, I have started buying additional shares of my core holdings to trade.  To note, I am not selling my core holding, which I plan to hold through the volatility.

So when one of my holdings dips, I buy an additional small position.   When it rises approximately 10%, I sell the small position.  Then I wait for it to dip again.   With multiple holdings, I can rotate as different sectors dip at different times. 

Normally, the cost of transactions would prevent me from making small trades of around $100-$200.   However, I was given free trades in two of my brokerage accounts, which allow me to make the small trades commission free.  Thus, my small profit is not eliminated by the commission charge.

I expect the market will continue to be volatile the rest of 2018, allowing me to "buy the dips, and sell the rips" with small trades.

For more on The Practice of Personal Finance, check back every Wednesday  for a new segment.

This is not financial or investment advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

Some Contrarian Scenarios

Here are my contrarian thoughts about the economy for the rest of 2018:

• Oil will go over $90/bbl.
• Interest rates will rise slower than expected.
• Inflation will continue to be low.
• Republicans will maintain a majority in Congress

If these scenarios happen, oil stocks, dividend stocks, and REITs should do well and our retirement investments should benefit.   

Disclosure:  We currently hold oil stocks, dividend stocks and REITs in our portfolios.

For more on Ideas You Can Use, check back every Tuesday  for a new segment.

This is not financial or investment advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

Taking Advantage of Low Tax Rates

With the new tax law, I can keep my tax rate at 12%, until 2025, unless there is a repeal.  I don't believe tax rates can be kept this low after 2025.  So I plan to convert as much of my Traditional IRAs as possible to Roth IRAs while still in the 12% tax bracket.   That way I can reduce my future RMDs, pay a low tax rate, and continue to grow our retirement savings tax free.

Of course, tax laws can be changed.  So I will taking advantage of the lower tax rate in 2018 and all future years.

For more on  Strategies and Plans, check back every Monday for a new segment.

This is not financial, retirement or tax advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

$100 Oil?

This CNBC article speculates that $100/bbl oil may happen in the near future.   Who knows, but if it does happen, our investments will benefit.  When oil and oil stocks started falling in 2015, I bought.  When they continued falling in 2016, I bought more.   When oil finally bottomed in 2017, I bought even more. 

It has been a painful journey.  Maybe  I will get some financial benefit from all the pain :-)

For more on  New Beginnings, check back every  Sunday for a new segment.

This is not financial or investment advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

Tax Day Freebies and Discounts

Many companies are offering freebies or discounts on this year's tax deadline due date, April 17, 2018.   To find them, search for Tax Day Freebies in [your city].   Freebies and discounts vary by location.

One Freebie I am considering is Kona Ice: one free shaved ice.  Kona trucks are supposed to be at post offices and tax preparation locations nationally.

Disclosure:  No compensation was received for this post.

For more on Ideas You Can Use, check back every  Tuesday  for a new segment.

This is not financial or tax  advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

Risky Business

"It's hard to make predictions, especially about the future."  ~ Yogi Berra

Who knows where the market is headed.  Certainly not me.  The market is extremely volatile and schizophrenic.  To me, there are three strategies one can take in this uncertain market.

1. Buy and Hold.  As one of my favorite bosses said, "This too shall pass."    Since the market inevitable goes up, just buy stocks and good companies and hang on to them.   Eventually, this strategy will pay off.
2. Trade the Dips and Rallies.  It seems to me that the market declines when President Trump makes a controversial tweet and then recovers in subsequent days when the position is softened.   Simply, buy when a decline occurs from a Trump tweet and sell a few days later after the recovery.
3. Sell Everything and Wait.  I know some people who have done exactly that. They expect an imminent crash of the market.

At this point, I'm leaning towards a blend of #1 and #2: buy core stocks and hold and add peripheral holdings (often of the same stocks) and sell into the rallies and then buy the dips.  Of course, I don't know what the future holds and if #3 is the right strategy, I will end up seeing a sharp decline in our holdings.

For more on Reflections and Musings, check back every Saturday for a new segment.

This is not financial or investment advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

First Job

My daughter got her first job.  She will be refereeing for the local youth soccer league.   It's kind of a gig job, but it pays well, about $20/hour.   Each week the coordinator asks which people are available to ref.   Those that respond will get assigned 1 to 2 games.   If she has other commitments or we're on vacation, she can just not respond.   Pretty nice for a first job.

For more on Crossing Generations, check back Thursdays for a new segment.

This is not financial or work advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

Tomorrow May Be Another Buying Opportunity

With the resignation of Chief Economic Advisor Gary Cohn, the stock futures have fallen about 1%.   Tomorrow may be another buying opportunity for us.   I probably will avoid buying at the open and wait to see if the markets continue to fall or immediately bounce back.

For more on  Ideas You Can Use , check back Tuesdays  for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

Waiting, Not Chasing

"Patience is a virtue." ~ old adage

Today's market advance prevented us from acquiring additional positions in our stock and ETFs.  I purposely didn't chase them and left the buy orders at  couple percent below Friday's closing price.

I expect that I will get more buying opportunities in the next month as volatility is now the norm.   It seems that market changes of greater than 1% are the new normal.   Waiting for the 1% drops will allow me to make purchases from our buy list at lower prices.

For more on Strategies and Plans, check back Mondays  for a new segment.

This is not financial or investment advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

Trying a Robo Investment Account

A new investment option I am trying is a Robo Investment account at one of our brokerages.  This account will invest only in ETFs and charge no account fees.  The only fees we will pay are the fees built into the EFTs that are used.   The investment strategy we will be using has a .28% expense ratio for the ETFs.

At this time, I have opened but not yet funded the account.   My plan is to wait for a further decline in the market before funding the account.

My plan is to hold three different types of investment accounts to determine our long term strategy:

• Actively managed accounts.   We pay a 0.9 to 1.25% wrap fee for actively managed accounts.  The strategies are: Growth, Deep Value, Income with Growth, and Dividend Growth.  The Robo account falls into this category at a much lower expense ratio.
• Passive Index.   I have several accounts that each have the benchmark indices of the actively managed accounts.  Over time, I will decide whether to keep the managed accounts or the index accounts for the long term.
• Personal investment strategies.  These are REIT, dividend, and trading/speculation strategies.  I will likely keep doing these on a small scale even after choosing between actively managed accounts and passive indices for the majority of our investments.  Unless, of course, I consistently perform better than these options :-) 

I will likely hold all three types of investment accounts through at least one economic cycle to understand overall performance and volatility.   After that, I plan to start moving funds to the preferred types of investment accounts.

For more on New Beginnings, check back every Sunday for a new segment.

This is not financial  or investment advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

Taking Advantage of Volatility

"The sky is falling!" ~ Chicken Little

For me, the volatility of the past month has enable us to buy into market index ETFs and REITs at lower (a.k.a discount) prices.   I've been scaling in by purchasing small lots of ETFs and REITs on my buy since.   There is no cost to do this since one brokerage we use has given us 100 free trades a month, we don't pay any commission on our small lot trades.

At this point, I feel the market correction is similar to the taper tantrum in May 2013 when then Fed Chair Ben Bernanke talked about raising rates.  The market reacted negatively, but soon recovered.   Fed Chair Jerome Powell and President Trump seem to have also talked down the market with their points of view on interest rates and trade tariffs. 

So I am cautiously optimistic and buying on the dips.  If the market should reach new highs, I will also sell into the new rally.  Hopefully, that is the outcome that will occur.

For more on Reflections and Musings, check back Saturdays for a new segment.

This is not financial or investment advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

How I Might Pay Zero Federal Income Tax Under the New Tax Law

"Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury...for nobody owes any public duty to pay more than the law demands." ~ Judge Learned Hand

Being a tax geek, I've been evaluating how the Tax Cuts and Jobs Act of 2017 affects our 2018 tax situation.  It appears that the new tax brackets, higher standard deduction and higher child tax credit will allow us to earn more without any federal tax liability, if we choose to use them to that advantage.

Here's how we might pay zero federal income tax in 2018.

First as background, I am married and have two children under 17, which qualifies us for the $2000/child tax credit.

Scenario 1

Make $57,333.33 regular earnings or less.    After subtracting the $24,000 standard deduction, $33,333.33 is our taxable income.   At a 12% tax rate, the tax is $4000, which is wiped out by the $4000 child tax credit.  Zero federal income taxes is the result.

Scenario 2

Make $71,666.66 or less through a pass through entity, such as an LLC, partnership or S-corp.  20% of pass through income can be deducted, which equals $57,333.33.    After subtracting the $24,000 standard deduction, $33,333.33 is our taxable income.   At a 12% tax rate, the tax is $4000, which is wiped out by the $4000 child tax credit.  Zero federal income taxes is our tax liability.

Scenario 3

Make $24,000 regular earnings, 103,866.66 dividends and long term capital gains.  After deducting the $24000, our taxable income is $103,866.66.   The first $77,200 is taxed at a 0% tax rate.  The remaining $26,666.67 capital gains is taxed at 15%, equal to $4000, which is offset by the $4000 child tax credit.  Again, zero federal income taxes.

Scenario 4

Make $57,333.33 regular earnings and up to $43866.67 dividends and long term capital gains.  
 After subtracting the $24,000 standard deduction, $33,333.33 is our regular taxable income.   At a 12% tax rate, the tax is $4000, which is wiped out by the $4000 child tax credit.  The remaining dividends and long term capital gains is below the $77,200 threshold for a 0% capital gains tax rate.

We won't be completely free of income taxes, since we live in a state with income taxes.   But is still be nice to pay no federal income tax if we can qualify for one of the above scenarios.

For more on New Beginnings, check back Sundays for a new segment.

This is not financial or tax advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

Financial Armageddon...Not

"It really does now look like President Donald J. Trump. And markets are plunging. When might we expect them to recover? A first-pass answer is never."~ Paul Krugman, November 9, 2016

Here is the full editorial in the New York Times.

As I recall, the markets recovered by the open on November 9, 2016.  Since then, the stock market has reached record highs, advancing by 20+% in 2017.  

Glad I didn't listen and react.

When might we expect Mr. Krugman to publicly admit his error?  A first-pass answer is never :-)   

For more on Reflections and Musings, check back Saturday for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

FORO

Fear Of Running Out (FORO) may be a financial challenge that we face should we reach our 90s.  By then, we will be retired at least 41 years which is longer than we have worked.  Unlike our parent and their siblings, neither of us have a pension on which we can depend.   Unfortunately, by 90 we probably won't have the wherewithal to solve the problem of running out funds.  So I am working on it right now.

The strategy I am developing is to create a reliable sustainable stream of income:  a pension like payment, without a pension.   Our approach is a three pronged approach:

• Real Estate -  We own part of a commercial real estate property.   As disclosure, we are accidental landlords, since I inherited ownership from my parents.  However, I have learned the benefits for being a landlord.    The property is paid off and fully rented with multi-year leases.   In addition, the partnership pays a management company to manage the property.   Currently this yields about 25% of our annual expenses.
  
  I like the idea of rental real estate.  However, I have no interest in acquiring other properties, given the hands on involvement that is needed.  So we are increasing our real estate exposure through the purchase of REITs.  Hopefully, we can boost the yield to cover 33% of our annual expenses.
• Dividend and Interest -   At one time, I was planning to have dividends and interest cover 50% of our expenses.   Based on where we are currently, I expect a 33% coverage of expenses is more likely.  My plan to get closer to the target is to execute an NUA this year of my company stock, which pays a 3% dividend.    We will purchase other dividend stock or CDs to cover the balance.
• Annuity -  We will depend on principal or Social Security to cover the remaining 33%.   In order to do so, we will need to wait until I am 70 to qualify for maximum Social Security payments.
• Bonus - Since we are invested in the stock market, there is a chance that we will get capital gains from our investments.  However, we are not counting on this, and if it happens, we will consider it a bonus.

So that's our plan.  Of course, there are no guarantees that it will work.   As Dwight Eisenhower once said, "Plans are useless, but planning is indispensable."   And so we will proceed with our plan, until circumstances require us to adjust.

For more on Reaping the Rewards, check back  Fridays for a new segment.

This is not financial or retirement  advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

Market is in Correction - How Long to Recover?

Today, the Dow and S&P crossed into correction territory of a greater than 10% drop from the high.  Is this a great buy the dip opportunity or not?   It depends on whether the correction becomes a bear market, a drop of 20% or more.

According to this CNBC article,  since WWII, corrections last an average of 4 months and take 4 months to reach a new high.  Bear markets last an average of 13 months and take 22 months to reach a new high.   The average correction falls 13%  and the average bear market falls 30%. 

At this point, the market is 1 week into a correction.  We'll see what tomorrow brings.

For more on Crossing Generations, check back Thursdays for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

Volatility is Back

"It will fluctuate." - J.P. Morgan, when asked what the market will do.

Although many have forgotten what market fluctuations are like, the past four days have reminded us that volatility is normal.   No market goes straight up forever. 

Does the recent volatility mark the end of the bull market?   At this point, I don't think so.   The economy is doing pretty well and bear markets typically don't begin unless a recession is imminent.   Could there be a correction of 10% or more?   Yes, probably but not for certain.  Could it last a while?   I think a couple months will be likely since that will cause sufficient investing pain.

 For me, this is a good time to add funds back into the market.   Stocks and ETFs I like are going on sale, and likely to get cheaper.   So I am buying.   Of course, it make take several months or years to recover, but I won't need the principal for at least a decade.   In addition, I am buying stocks that have good dividends that are growing, to create a sustainable paycheck for the future.

There is a small chance that I am wrong... that this is the beginning of a major crash/collapse from which there is no recovery.  But history has shown that has never been the case and the market has always gone to new highs.   So I'm sticking with the event that has a 99.99999% probability of happening.

For more on The Practice of Personal Finance , check back Wednesdays  for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

Buying Opportunity

The market downturn of the previous two days and today's volatility gave me the opportunity to make some purchases in our investment accounts.  I chose to buy several index ETFs and some individual stocks.   I expect the downturn/volatility to continue and will be making more purchases during this time.

Fortunately, I have qualified for free trades at a couple of my brokerages, which allows me to buy in small amounts without any commission costs.  Thus, I can avoid the pain of a large position falling soon after I buy it.

The following are the ETFs and stocks I have bought:

Growth

• MTUM - This ETF follows the MSCI Momentum Index.   It has a low expense ratio of .15%
• VONG -  This is a Russell 1000 Growth Index ETF.  .12% expense ratio.

Total Market

• VOO - This is a S&P 500 Index ETF  .04% expense ratio.

International

• VEA -  This is a FTSE Developed Market Index.  It is mostly (99%) non-US. .07% expense ratio.
• DFJ - This is a Japan Small Cap Dividend ETF. This the highest expense ratio ETF that I purchased at .58%

Income Stocks

• GLPI -  Gaming and Leisure Property, Inc.  REIT paying 7%
• WPC -  W.P. Carey, Inc.  REIT paying 6.3%
• NNN - National Retail Property, Inc.  REIT paying 4.8%
• O - Realty Income Corporation.  REIT paying 4.95%
• STAG - Stag Industrial, Inc.  REIT paying 5.7%

I will continue to make small additions to the positions as the market declines.   Also, I may buy other ETFs and stocks that meet our investment criteria.

Disclosure:  As of the time of posting, we own shares of all the above mentioned stocks/ETFs in our investment accounts.

For more on The Practice of Personal Finance, check back Wednesdays for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

My Investing Dilemma

"If it's too good to be true, it probably is."  ~  old adage

The market returns have been unexpectedly and shockingly great in January.   I fully expected at least a small pullback as investors locked in 2017 gains and sold on the news of tax reform.   However, the market has continued to march upward, showing the enthusiasm of investors for the stock market.

I did add some funds this month, but much less than I was planning to do.  I am now faced with a decision of adding significant funds just before a pullback or holding back and missing another 5% advance.   Of course, a third scenario would be adding significant funds just before another 5% advance, but I give this a low probability:-)

I recall in 2007, I faced the same decision.   Without much concern, I put a significant amount of retirement cash into equities.   Everything was going up; my company stock was at an all time high; the indices were at an all time high.   A year later about 40% of our retirement savings were wiped out by the great recession.   The memory keeps me from jumping into a rising market without caution.

So my plan now is to stay invested in our managed accounts, which have all done exceptionally well in January, and continue to take profits when the account exceed the minimum required amounts by 1-2%.   Since I am currently underexposed to international stocks, I will slowly add funds to select international commission free ETFs until the target investment levels are reached.   That way if the market corrects, I will mitigate our losses and acquire some shares at a lower cost basis.

However, now I will be waiting for a correction before adding significant funds to equity investments.

For more on Reflections and Musings, check back Saturdays for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

Letting Profits Run

As the market continues to rise, I am very tempted to sell some of my new positions for a 20% gain or more.  After all, taking profits isn't bad to do.  And I've had gains turn into losses when I waited too long.

Recently, however, the stocks I sell have continued to go up about 80% of the time.   As a result, I've left a lot of money on the table.

So I'm going to start following this investing rule:   Keep the winners and let profits run.

We'll see how this works over the next few weeks.

For more on The Practice of Personal Finance, check back Wednesdays  for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

Convincing Myself to Buy More Stocks

At the end of 2017, I posted that I would add funds if the market went up or if the market went down.  Well, the market went up the eight out of the nine first trading days of the year.   I didn't expect that.   I was planning on a decline, which would allow me to add funds at a lower cost basis. (For reference, I did buy some on the down day.)  Now, I will need to buy at higher prices, with the fear that the market will fall right after I buy.

After spending the last week considering my options, I have convinced myself to add funds systematically by purchasing on the dip with winning stocks and buying good stocks in beaten down sectors to mitigate the downside risk.  However, I will wait for a correction before adding significantly more funds.

Despite many arguments for the market being too high and the bull market being too long, below are my reasons that I believe the stock market will continue to rise:

• The stock market advance indicates approval of the government's actions over the past year.  The sentiment is the economy will improve, businesses will grow, and 
• Trump will continue to drive his pro-business, anti-regulation, and America first agenda.  wall Street and business are responding well in this environment.

Of course, interest rates could rise sharply, which would cause stocks to decline.

Finally, an Wall Street adage is " A bull market climbs a wall of worry."   And there is a lot of worry right now.

For more on Reflections and Musings, check back Saturdays for a new segment.

This is not financial or investment advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

Million Dollar Poverty

"A nickel ain't worth a dime anymore." ~ Yogi Berra

When I was growing up, a million dollars or being a millionaire was the holy grail.  I thought I would have it made if I could accumulate a million dollars.  It definitely would have been enough

Nowadays, a million dollars may not be enough according to CNBC for today's retirees.   A million dollar nest egg would yield $40,000/year using a 4% withdrawal rule.   This would last about 12 to 25 years depending on one's state of residence.   For 42 year old GenXer, the withdrawal would be $19,000/year inflation adjusted.   The articles notes for a 32 year millennial, the withdrawal would be below the poverty line, which the article characterizes as "million dollar poverty."

Given inflation and longer life expectancies, I estimate the nest egg holy grail for our kids will be at least $5 million...or even more.  

For more on Crossing Generations, check back Thursdays for a new segment.

This is not financial or retirement advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

Going with the Flow in 2018

I am convinced the next couple months will be a good time to put more funds back into the market.  If the market goes up, I will buy into the advance.  If the market declines, I will buy into the dip.   If it stays flat, I will wait before buying.

My plan is to buy commission free ETFs so that I can make several buys in small quantities.  That way if my timing is off, I can use the opportunity to dollar cost average down..

Tomorrow, January 2, is the first trading day of 2018 and will be my first read of the market sentiment/direction.

For more on Strategies and Plans, check back Mondays  for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC