Scaling Out and Protecting Profits

"Danger, danger, Will Robinson!" ~ Robot from Lost in Space

As 2019 wraps up, I've made a conscious decision to sell some of our core stock holdings to lock in profits and increase our available cash.

Here are my reasons:

• Fundamentals (earnings, P/E etc) don't support current stock valuations.   Stocks appear to be overbought. 
• Several indicators show the market is overvalued.   The Buffett metric is at 145% for stock market valuation/GDP.   The metric peaked in 2008 at about 118% and in 2000 at 161%.
• Debt (personal, corporate and margin) is at an all time high, fueled by low interest rates.
• Expectations are high that the market advance will continue into 2020.

At this point, I am not exiting the market immediately nor am I exiting the market completely.   With stock trading commission going to $0, I plan to take about 10-20% of the profitable position out of the market.  Some positions I will take to zero. Others, I will remain 20-80% invested.  For the managed accounts, I will keep the amount invested at or near minimum requirements.

For clarification, I am not predicting an imminent decline.  Nor am I shorting the market.  However, I think the downside risk is much higher than the upside potential.   So I am willing to forgo some gains to sleep better at night...

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

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

Copyright © 2019 Achievement Catalyst, LLC

Investment Strategy - Near Term

The stock market seems overvalued.

Here's are short term strategy:

• Keep 3-5 years expenses in cash and cash equivalents.
• Keep intermediate funds (5-10 years) invested.
• Keep long term fund in cash, ready to invest in a pull back or bear market.

At this time, the downside risk seems higher than the upside potential.  So we have reallocated accordingly.   If the market falls, we are protected.  If the market continues upward, our intermeidiate funds will participate.

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

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

Copyright © 2019 Achievement Catalyst, LLC

A Lucky Day

We were lucky today.

We went to our local ski resort to get our annual passes and have our skis tuned up.   While there, we participated in a free raffle and a free spin the wheel for prizes.   For the wheel spin, my daughter won a gift card and I won some ski related stickers.   After we got home, I get a call telling us that we had won second prize in the raffle.   I excitedly told the caller, "We never win!"

So much unexpected fun.

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

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

Copyright © 2019 Achievement Catalyst, LLC

Energy Investments

Today, our energy investments are seeing 5-20% gains depending on the stock.   I plan to take some profits but allow most to the positions rise 20-40% before more selling.  Overall, we are still down on most of our oil and gas stock investments.   So this advance will hopefully get us back to about even.

At this point, I expect the pop in oil prices to be short lived.  But who knows, it could last longer or go further.

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

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

Copyright © 2019 Achievement Catalyst, LLC

Scaling In and Taking Profits

During the market volatility of the past two weeks, I've been scaling into several beaten down stocks in the oil, growth and retail sectors.   I've also been using the opportunity to buy into some high, but safe, dividend paying stocks.Now some of them are rebounding.   So I am selling some shares at they cross the 15% gain threshold.

I fully expect the market will continue to volatile and I will have an opportunity to repurchase the sold shares at a lower price soon.

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

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

Copyright © 2019 Achievement Catalyst, LLC

How Much Savings is Needed to Live Entirely Off Investment Income Until 90

It depends.   On how old one starts and the desired income.

Here's an article that does the analysis.

Here is my brief summary of what's needed.

Starting Age        Investment Funds Needed

       25                   60 times desired income         

       35                   52 times desired income                 

       45                   43 times desired income

       55                   35 times desired income

       65                   25 times desired income

The analysis assumes no social security or other supplemental income such as blogging, rental, etc.

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

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

Copyright © 2017 Achievement Catalyst, LLC

Potential Changes to Retiree Savings, Pensions and Social Security

Several proposals in Congress may get passed and significantly affect my retirement income.  They are summarized in this article from CNBC and quoted below.

Here are the key points from two of the proposals that affect me:

• Secure Act - "The Secure Act would include a bevy of changes to existing retirement rules. Its main goal: to expand access to retirement savings.
  
  It includes measures to allow small employers to band together to offer 401(k) plans, give part-time workers access to retirement plans, take away the 70½ age limit for individual retirement account contributions and raise the age for required minimum distributions to 72, from 70½.
  
  It also would expand the inclusion of annuities in 401(k) plans and put a 10-year time limit on how long non-spouse beneficiaries can stretch out an inherited IRA."
  
• Social Security 2100 Act -  "The Social Security 2100 Act looks to fix that by extending the solvency of the program into the next century...
  
  The proposal would give those who are or will be receiving benefits a raise that is the equivalent of 2% of the average benefit. It would also set the new minimum benefit at 25% above the poverty line.
  
  The plan also would increase the amount of non-Social Security income one can earn before benefits begin to be taxed. The new limits would go to $50,000 for individuals and $100,000 for couples, up from today’s $25,000 and $32,000 thresholds.
  
  In order to pay for those changes, the bill calls for raising payroll taxes on wages over $400,000. Wages up to $132,900 are currently taxed."
  

In addition, there are a three elements that don't affect me much if at all.

• Rehabilitation for Multiemployer Pension Act - "Many so-called multiemployer pension plans are on the brink of running out of money...The new bill would let pensions borrow money to remain solvent so that they can continue to pay retirees. The legislation would create a Pension Rehabilitation Administration within the Treasury Department and a trust fund from which the loans would be distributed.
  
• Health Savings for Seniors Act - " This bill would allow individuals who are on Medicare to continue to contribute to health savings accounts. Currently, they are prohibited from doing so.
  
• Equal Treatment of Public Servants Act - This bill "would enable public workers to get larger Social Security benefits. A current rule, the Windfall Elimination Provision, reduces their benefits based on how much pension income they receive."

A couple of these have been passed by the House, but not the Senate.  The other three are still being considered by the House.

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

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

Copyright © 2019 Achievement Catalyst, LLC

What Markets Do After a Yield Curve Inversion

Yield curve inversions don't usually mean an immediate declining market. It can be as short as a month or up to two years, with the market peaking over 30% higher.   However, a yield inversion usually does mean an market peak and subsequent decline is coming in the next 24 months.

Here is a Marketwatch article with more of the details.

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

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

Copyright © 2019 Achievement Catalyst, LLC

2-10 Year Yield Curve Inverts

For the first time since 2005, the 10 year treasury yield fell below the 2 year treasury yield.  This yield curve has preceded the last seven recessions dating back to 1969, with the most recent being 2007-2009.  The yield curve inversion can occur several months to a couple years before the start of a recession.

Here is a Yahoo! Finance article with more details.

Although I have been trickling small amounts into stock purchases, I will be consciously taking profits and reducing equity holding over the next six months to a year.

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

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

Copyright © 2019 Achievement Catalyst, LLC

Negative Interest Rates Impact

The hope negative interest rate to significantly stimulate economies hasn't been realized.  Instead, negative interest rates has increase investments in non productive assets, e.g. real estate, stocks, and not into investments that increase GDP.   In addition, exiting from a low interest rate policy is difficult due to exchange rate impacts that strengthen the local currency.

Here is an article from The Financial Times (subscription my be required to view) discussing the situation with Sweden.

Here is an article from the World Economic Forum discussing the effectiveness and impacts of negative interest rates.

In either case, it appears that negative interest rates and the exit may lead to an undesirable economic ending.

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

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

Copyright © 2019 Achievement Catalyst, LLC