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