General

There are more than 20 million people in the U.S. with enough assets to fit the definition of a millionaire, according to a 2020 study by Credit Suisse. Chris Hogan, radio host and author of the book “Everyday Millionaires,” surveyed more than 10,000 of those wealthy individuals to figure out their secret to success.

I thought I’d share some of his findings in our blog post.

It’s been a crazy couple of months for the stock market. After falling into the fastest bear market in history in February, the S&P 500 is back near all-time highs. And that’s despite Q1 earnings for the index cratering 66%, one of the worst showings in its history.

In 2009 I sent out a newsletter with the following quote: “I have never seen this kind of volatility or irrational activity in 20 plus years." I later went on to mention the "...large one day drop of 4.58%..." My how times have changed, or not!

My first comment certainly holds true today. The daily volatility, which I address below, would have been unthinkable just two or three years ago. And while I do not mean to minimize the seriousness of the corona virus, I cannot call the market reaction rational. 

“Simply put, our economy is strong, unemployment is at a 50-year low, household income is at a 20-year high, consumer sentiment is near record highs, and corporate earnings continue to impress.” www.Zacks.com

Q: So what went wrong?

A: The Coronavirus

The stock market does not like uncertainty, especially uncertainty centers around a question like, “How bad can it get?” More and more experts and market pundits are answering that question with some variation of “Pretty bad?”

According to UBS, the ultra-wealthy hold on average 25% of their capital in cash. Their rationale is that the stock market will see big trouble in 2020. On the surface that seems like a scary warning for the rest of us. But before you make such drastic moves with your portfolio, consider the following:

One of the “deadliest” sayings in investing is “This time it’s different”. Many investors and pundits, when faced with data contrary to their current views will rationalize a position by saying those infamous words. As they say as well, “history may not repeat, but it does rhyme.” While the big picture may not repeat, policy decisions and market reactions do. Whether interest rates are changing due to inflation fears, a slowing or accelerating economy, macro dollar policy…the results are the same. Fed tightening (rising interest rates) are never good for the market or the economy.

Many people who don’t write themselves, think that writing a few paragraphs on a topic, posting it, and calling it a blog, is a pretty easy process. But as I’ve been a writer for years from everything from a book and to professional publications to many, many blog posts, let me say, it isn’t that easy! Ideas may be many but formulating an idea into a cohesive article, doing research when necessary, and trying to stay timely in our rapid changing (financial) world can be a tough ask.

Introducing Fund Trader Pro, LLC (FTP) a new company with a new approach to managing 401k retirement accounts. FTP is a robo advisor with a personal, customer centric business model.

FTP’s approach utilizes a momentum based model co-authored by Bill DeShurko, one of FTP’s Managing Members. The research was awarded the prestigious Charles H Dow Award by the Market Technicians Association in 2008.

While we do agree that past performance is certainly not a guarantee of future results past performance does provide valuable information.

Russell style indexes exhibit significant momentum, particularly after medium term out- and under performance. The existence of this momentum produces a diversified, index-based low-cost means to exploit momentum by incorporating relative style index performance into tactical allocation strategies. Such style index momentum trading strategies have outperformed on both a raw and risk adjusted return basis, with the long minus short portfolio generating an average 9.25% annual return over the 34-year period analyzed.