The Rubicon

There is no American I respect more than John McCain.
Therefore,

there is no American I respect less than Donald Trump.

Your Personal Roadblocks

The media reports the unemployment rate each month, which is currently about 4%.  Economists normally look at the JOLTS report, which shows the number of job openings is a record high 4.2%.  In other words, there are more job openings than there are workers to fill those jobs.  This is a all-time record.  The job market is TIGHT!

Equally important, workers rarely quit a job without having another, almost always at higher pay.  A high number of quits suggests a tight job market.  About 2.2% of workers quit their jobs last month, the highest since 2001.  This also puts upward pressure on wage expenses.  The job market is TIGHT!

The increased job openings are pretty much across the spectrum.  Transportation, warehousing, information, and construction are producing the most jobs.  Education, health, wholesale trade, and finance are producing the least, relatively speaking.  The job market is TIGHT!

If you cannot find a job in this market, there is something wrong.  Either your job expectations are unreasonable or you won't get the right training or you are unwilling to go where the jobs are and expect the jobs to come to you.  All of these reasons are called "self-sabotage," where potential workers create their own impediments to work.  They sabotage their own job prospects.  Do you know anybody like this?

If you cannot get a job today, it is because you do not want a job enough to remove your own impediments or roadblocks .

A Planner Too Long ?

In 1985, I watched the classic Out of Africa movie with Meryl Streep and Robert Redford.  She played a wealthy Danish woman who came to Kenya and fell in love with a professional game-hunter.  By the end of the movie, she had lost her wealth, and he had lost his life.  A sad love story, the film nonetheless won seven Academy awards.

In 1988, I earned my certification as a financial planner.

For some odd reason, I wanted to see the movie again last night but saw it this time through the eyes of a long-time financial planner.  Instead of seeing a wealthy Danish woman, I saw a hopeless romantic, who wanted to plan everything in detail, including her love life.  Instead of seeing an impossibly handsome professional game hunter, I saw an unstructured vagabond this time, who lived only for the day, abhoring any long-term planning.

Instead of seeing star-crossed lovers this time, I saw a couple with different planning needs.

How do you reconcile these different planning needs?  While not very romantic, it is essential to talk about the need to plan.  How do you tell your kids to find a mate who is a good financial planning candidate?  Well . . .  good luck on that!

Take A Stand !

Suppose I owe you a lot of money and then suppose I only pay you 77% of what I owe you.  How happy would you be?  Now, suppose you knew 20 years before that it would happen.  Would you try to do something about it?

Social Security is a pay-as-you-go entitlement, meaning money paid into the system immediately goes out to recipients.  Up until 1965, there were roughly ten workers to support each retiree.  Today, there are about 3.4 workers who are paying my monthly Social Security checks.  Thanks, guys!

The demographics are that men are living longer,while the birth rate is declining.  Either we start having more babies and allowing more immigrants, or men have to stop living so long.  (While older women still outnumber men on Social Security, the gap is closing.)  The demographics are not helpful.

The revenue provided by workers has been less than entitlements paid since 2010, and we are already dipping into the "reserve funds."  And, the trend is getting worse, with the fund being dissipated by 2034.  At that point, it is estimated your monthly check will be reduced to 77% of what it is now.

Our options are to increase the labor pool, increase Social Security taxes on workers, scrap the Social Security fund and simply pay entitlements out of the government's general revenue fund (which moves the deficit from one account to another), start decreasing the monthly checks, cutting off people like myself who don't need it, or the politicians' favorite -- just do nothing and hope something good happens.  What would you do?

As long as Republicans believe that "what works in theory will work in practice" and as long as Democrats want to obviate poverty and unhappiness in every identity group, Congress will remain impotent.  I marvel that this subject has not been discussed with Republicans in control of all three branches of government.  Would Democrats have done any better with control of all three branches?

I recall a Congressman who said the job of Congress is to "do nothing, do nothing, do nothing, and then over-react!"  Sadly, he was being honest.

But, what would you do?

The Joy of Regulation

It is fashionable to "trash-talk" regulations, and some of that is fair.  However, some regulations are better than others and are actually good for America!

Famously described as "financial weapons of mass destruction" by Warren Buffet, derivatives have posed ever-greater risks to the financial system and were largely responsible for the global financial crisis of 2008/9.  I have often said I would sell 25% of stocks when the first derivatives blow-up occurrs and the remainder when the second derivative defaulted.  That's how big and real the risk has been.

One real problem in regulating derivatives is that they are traded off-the-exchanges, meaning we could not be sure how big a problem they presented.  This lack of transparency made it difficult to estimate the threat.  Fortunately, bank regulators rode to our rescue.  As they audited bank statements, they hounded the bankers to justify every investment decision involving the use of derivatives.  As a result, the value of derivatives actually employed has fallen markedly.

Going into 2008, there were about $35 TRILLION, declining to $15 TRILLION at the end of 2016 and "only" an estimated $11 TRILLION today.  This is great progress!  Federal auditors should be applauded, for reducing the risk of these "financial weapons of mass destruction."

But money hates transparency, and nobody is confident how much of a problem "dark pools" are becoming.  These are large pools of money that some banks, particularly offshore banks, and some offshore money managers to trade stock positions without transparency.  In other words, you can buy or sell stocks and other assets, while nobody knows it.  More pointedly, nobody knows how much leverage was used for each of those purchases.  U.S. bank regulators have far less regulatory authority with these offshore dark pools.

Like water flows to the lowest point, money flows to the lowest point of regulation and transparency. 

Stay tuned to this potential problem . . .

The Need To Please

On a long flight recently, I took the opportunity to read a biography on Tiger Woods. Everybody knows the story of Tiger, but I am interested in father-son relationship between Earl-Tiger.    Earl was a former Green Beret, who was determined that his son could change the world, literally.  He had a disciplined focus on that objective.

Earl taught Tiger the disciplined focus of Special Forces - accomplish the mission.  I remember a Colonel saying “you may have to go through hell to accomplish the mission and, if so, I expect you to go to hell!”  For example, Earl would shout obscenities at Tiger as he was swinging at the ball, simply to break Tiger’s concentration.  It is no surprise that Tiger became such a focused competitor.

The difference between father & son was that the son had a need to please his parents.  Earl had no need to please anyone.  (Any such need by Earl would have been extinguished in Special Forces.). Tiger’s need to please his father probably made him the greatest golfer of our time.  I suspect that also made him emotionally vulnerable, making him different from his father.

Teaching disciplined focus to an emotionally vulnerable person is problematic.  Normally, the more focused you are, the less people are pleased with you.  In Tiger’s case, the normal response was overwhelmed by the millions of dollars suddenly flooding into his family, as well as the glory and adulation by millions of fans.  Tiger thought he was pleasing the whole world and was proud of that.

As they say, pride goeth before the fall, and Tiger fell hard.

Maybe, the lesson learned is that hard-charging Alpha-male fathers can, with the very best of intentions, do real damage to their sons - at least sons with a need to please.

Land of Concertina

If you have ever wanted to see the beautiful country of South Africa, I recommend you do so within the next year. The pot is beginning to boil!

GDP growth rate is flat, compared to 2.2% in the U.S. and 6.8% in China.

Inflation is 6%, compared to 2% in the U.S.

Unemployment is 27%, compared to 4.1% in the U.S.  To appreciate how destabilizing this is, remember that U.S. unemployment never exceeded 25% even during The Great Depression!

Despite the “fall” of apartheid 25 years ago, the issue of race still dominates everything.  Remember the U.S. Emancipation Proclamation was in 1863, and we still have racial strife —154 years later.

The immediate past president is facing charges of corruption and wii probably go to jail next year.  His many supporters have a history of “taking to the streets.”

The current president is advocating confiscation of white-owned farmers without compensation.

Two hundred people move into Capetown everyday, fleeing violence in rural areas.

A tourist bus was fire-bombed in Soweto last week.

There is a national transportation strike by buses and taxis.

Government workers are striking for higher wages.

Everywhere I look, I see fences topped with sharp concertina wire.

Did I mention that 2019 is an election year, when passions are normally aroused.

Visit now or wait until the smoke clears, literally.

Et Tu, Brute ??

It is bad enough that the morally-challenged technology firms in Silicon Valley argue they have a right to know everywhere you go online, everything you buy in stores, every event you attend, and every lever you pull on election day.  But, those big tech firms are nothing more than apologists for advertising firms.  After all, who doesn't want personally-targeted advertisements?

I've never viewed economists as morally-challenged but now have doubts.  Using deep data-mining and machine-learning, they are starting to use statistical techniques like gradient boosting and the random forest approach to predict recessions.  After all, who doesn't want better economic forecasting?

A "self-fulfilling prophecy" is a prediction that actually happens because of the prediction.  In economic terms, if people believe a prediction that the economy will go into recession, then they will decrease their spending, which puts the economy into the predicted recession.

Believing "the road to hell is paved with good intentions," how do we prevent the inevitable?  Just because something can be done, it doesn’t mean it should be done.  The problem with waterfalls is that they are low on the horizon and hard to see . . . 

I expect better from economists!  Stooping to the level of Facebook or Google is disappointing.

A Duck By Any Other Name . . .

My Republican friends think I'm a Democrat.  My Democratic friends think I'm a Republican.  They're both wrong!  I'm an Austrian economist.

Both Republicans and Democrats practice deficit spending, but they cloak it with clever phrases.  The Republicans call it "tax reform."  The Democrats call it "social investing."  Both phrases are cute cloaks for deficit spending.

Of course, both insist the deficit spending is merely a short-term result.  Republicans say tax reform (read:  tax cuts) will encourage "job creators" to invest more money and spur the economy.  Democrats say increased social investing will increase consumer spending and spur the economy.  Either way, increased deficits in the short-term will make everything great in the long-term.  Sure!

Austrian economists argue government revenues must equal government spending.  Like families, you don't spend more than you make.  Unfortunately, neither Republicans nor Democrats can think beyond their clever phrases.  Scratch a Republican, he'll say the problem is too much spending on entitlements.  Scratch a Democrat, he'll say the problem is the rich, who won't pay their fair share of taxes.  Mere cloaks!

At what point will we admit that the two-party system is failing us?  

Noblesse Oblige

My Republican friends laugh when I describe Jimmy Carter as our greatest ex-President.  A wealthy man, he has devoted his post-presidential life to helping others.  However, only Trump-Republicans laugh when I describe Barbara Bush as our greatest ex-First Lady.  After all, she was not a Trump-Republican.  But, she worked tirelessly raising money to fight illiteracy, raising close to $200 million dollars for that cause.

Whatever happened to wealthy people who felt the need to help others?  Was philosopher Ayn Rand responsible? She famously decried that anything which supported poor people only encouraged them to produce more poor people - a classic abuse of Austrian economics?  Was it partisan spillover that characterized the mammoth charitable giving of Warren Buffet and Bill Gates (known Democrats) as mere self-glorification?  I don't know, but I miss it.

It was called noblesse oblige, a French expression that translates as "nobility obliges."  It means there is an obligation to do "good" things.  As a client once told me, "now that I've done well, I want to do good."  Yes, he donated money, but he also physically worked to repair old churches and sought no self-glorification.

Barbara Bush was the epitome of noblesse oblige and a grand lady.  There was room for disagreement in her world but no room for rudeness or bad manners.  She is missed!

Good Reasons for Bad News

One of the components of the Index of Leading Economic Indicators is homebuilder confidence, which has dropped again, for the fourth consecutive month.  This is not good news.  However, there are good reasons for it!  There is ample demand for new homes, but there is a shortage of lots to build on and almost none of those are conveniently located for homebuyers.  Plus, our country is having a trade dispute with Canada, which is the biggest exporter of lumber to the U.S.  The cost of that lumber is rising rapidly, increasing the cost of housing and making them less affordable.

So, if you're a homebuilder facing a shortage of lots and rising prices, what do you do?  Build condos?  Oh, did I mention that interest rates are rising?  Maybe, NOW would be a good time to buy a home?

This is just another indication that the economy remains strong, maybe too strong.  Behind this good economic news, we can expect the financial data from homebuilders to suffer.  You see, good economic news can produce bad financial news . . . 

Gaming A Crisis

It was thirteen months ago that I predicted that President Trump would be impeached or resign.  My Democratic friends applauded, while my Republican friends condemned.  It was not a prediction that was made with any joy.  Make no mistake:  Any constitutional crisis is bad for the country, which therefore also makes it bad for the stock market.

When I made the original prediction, my confidence level was about 60% that Trump would be impeached, but that confidence level has now risen to about 90%.  I still think there is no chance he would be convicted by the dysfunctional Senate, even with a Democratic majority.  (It would be the ultimate existential crisis for our Constitution, if he was convicted and refused to vacate the White House.)

I have reviewed the behavior of the stock market during the impeachments of Andrew Johnson, Richard Nixon, and Bill Clinton but found no useful pattern, except this:  Stocks dropped significantly but always recovered nicely.  Clinton's experience was the easiest to understand - stocks dropped when impeached but soared when the Senate trial began.  Nixon's was much more volatile -- stocks swinging wildly on every rumor or press release.  Johnson's experience was not helpful, due to the lack of stock market data 150 years ago.  My assumption is that the market will drop when impeachment becomes obvious but quickly recover when the market realizes the impotence of the Senate.

But, what about the timing of this constitutional crisis?  Assuming the Democrats retake the House in November/January, they could not get a bill of impeachment through the House immediately, as a good number of Democrats also abhor impeachment as much as I do.  Plus, many fear the social conservatism of the Vice President more than they fear the President's "unpredictability."

For now, I will not be selling stocks until the November election.  If the Democrats merely retake the House, I will take no action.  If there is a huge "Blue Wave," I will start increasing cash.

Q1 Column

My latest column for Inside Business can be found here:

https://pilotonline.com/inside-business/news/columns/article_b8d95666-3bf4-11e8-8aa6-2fab2a087df4.html 

If your browser cannot accept a hyperlink, go to www.pilotonline.com and enter Flinchum into the search box on the upper right.

I Told You So . . .

I will NOT say . . . I told you so.
I will NOT say . . . I told you so.
I will NOT say . . . I told you so.
I will NOT say . . . I told you so.

That expression is so sanctimonious but seems to mean less as we get older?

Yes, ten years ago, once I understood the business model of Google was to shred privacy, I became paranoid that Americans were giving up a basic right but didn't realize it.  Google's search engine offered too much value to be free.  They had to be making money by selling your data/privacy.  (Since then, I have avoided them like the plague, using BING instead which is only less bad.)

Now, we learn that Facebook is the master-shredder of privacy, likely allowing the Russians to interfere with our elections.  Maybe, I should thank Facebook for proving me right, allowing me to say "I told you so."  The CEO of Facebook faces Congress this week, and I hope he gets crucified.  He is certain to be crucified if he testifies in Europe, where privacy is still appreciated.

First, the Google search engine was wonderful.  Then, Facebook sharing was so human.  Now, the Cloud is so efficient.  What could possibly go wrong with the Cloud?

Yes, there are benefits to sacrificing your privacy, because you get better (more focused) advertisements.  So what?  Who cares?  I don't know how many millennials have told me that privacy is as over-rated as chastity, which is ridiculous.  They don't miss what they never had!

When you see an Amazon Alexa or Google Home device in my home, then you will know that Hell has indeed frozen over and will never thaw.  Then, millennials can tell me "I told you so!"

Finding Emotional Pearls

A bright shiny object attracts the eye, away from other things.  Likewise, the eyes are also a bright shiny object attracting the mind, away from other things.  Some people may not be as observant of bright shiny objects in the outside world, they may be more observant of bright shiny objects of the inside world -- inside their own minds.  Most care more about the outside world, but some care more about the inside world.  Some people rummage through their emotions and find pearls.  Rodriguez is one of those.

Known by his last name, he was a poor first-generation American of Mexican descent born in Detroit in 1942, and he rummaged through his emotions to write song lyrics, which are often compared to that of Bob Dylan.  After two albums won critical acclaim but no sales, he returned to hard physical labor for decades.   Somehow, against all odds, his albums sold heavily in South Africa - outselling both Elvis and the Rolling Stones.  Only, Rodriguez never knew it and became a cult enigma.

Bob Dylan would never do this, but Rodriguez would perform with his back facing the crowd, focused on his inside world, not distracted by his eyes.   Maybe, that is the reason Rodriguez never knew he was a superstar elsewhere.  Maybe, that wasn't interesting enough to him.  But, his lyrics are haunting.  They roll around and germinate in your mind.  I understand "hello only ends in goodbye" but what is a "store bought soul"?  Is that the same as the "authenticity" that existentialists extol endlessly?

Few things are black-or-white, all-or-nothing.  But, what percentage of your thoughts are focused on the outside world instead of the inside world, and how will you know if that is the right percentage for you?

"Strum and Drang"

"Strum and Drang" is a German expression, roughly meaning "Storm and Drive."  It described the eighteenth century anti-enlightenment philosophy embracing emotionalism and rejecting rationalism.  Such is also the presidency of Donald J. Trump, and I pray that it is worth it.

The latest instance is threatening a trade war, particularly with the world's second largest economy, China.  Despite the predictable over-reaction of stock markets worldwide, it is a battle the U.S. is likely to win.  Remember:  Nineteen percent of China's exports goes to the U.S. while only two percent of our exports go to China, plus China's economy is export-based and needs exports more than the service-based U.S. economy.  They need us far more than we need them!

There is considerable fear that we are dependent on China's continued purchasing of U.S. Treasury Bonds to finance our ballooning deficit, especially since the Republican tax cut.  In truth, the Chinese have not been significant purchasers in years, maintaining a relatively stable portfolio.  But remember, we don't need foreigners to buy our Treasury bonds.  The Fed spent four years buying our bonds, to finance the monetary stimulus known as quantitative easing.  If the Chinese dump our bonds, the Treasury will not redeem them -- the Fed will buy them on the open market, thus stabilizing interest rates.  A very unsatisfactory alternative in the long term but works in the short term.

"Strum and Drang" may be the right approach to negotiating with China, but is it therefore the right approach with Mexico, China, Korea, et al.?  Or, is it merely the only approach?

Please let there be method to the madness, as there is certainly an ocean of madness . . . and embarrassment . . . and anger too!

A Thousand Words

Almost Showtime ??

While there is always an economic recession in front of us, a recession is not necessary for the stock market to sustain a 10% correction or even a 20% bear market.  Likewise, a stock market slump does not reliably predict a recession.

The current stock market slump started with the January Jobs Report, which indicated inflation was back, due to a 2.9% year-over-year increase in average worker earnings.  That meant interest rates would come faster than expected, to cool down inflation.  Then, it was revealed that two wildly successful tech giants were mere privacy-pirates, putting their continued business model in doubt.  Then, the president began brow-beating another tech giant.  Small wonder that this market slump is tech-lead.

Behind it all, I see growing anxiety about a possible trade war.  While it may be little more than a trade slap than a trade war at this point, the downside is huge.  The system of international trade that was painstakingly built over the last century has been turned upside-down with uncertainty.  Maybe, that is not all-bad?  That system was not well-suited to evolve in a world with an ever-increasing rate of change.

It was a China Shop, and Trump was the bull.  The system was Humpty-Dumpty, and I hope somebody can put it back together again.  The removal of any small amount of uncertainty would cause the stock market to rally strongly.  We need to see The Art of the Deal, not some "short-fingered vulgarian" as described in Vanity Fair. 

Two Things To Remember

People disagree on which TV commercial by Apple is the best one.  Most think it was the iconic "1984" commercial.  My vote goes to the "Lemmings" commercial, which was aimed at IBM users.  You can see it here:

https://www.youtube.com/watch?v=V-SJQdREDKM 

Attending a local church service, where it is customary for the congregation to stand up occasionally, primarily to sing, I watched an older gentleman stand up at the wrong time.  Thinking the gentleman knew something nobody else knew, the entire congregation slowly also stood up with him.  Jointly realizing their shared error, the congregation sat down, while softly laughing at themselves.

Last week, a respected politician predicted, without any satisfaction or joy, that there will be a major constitutional crisis in 8-9 months, emphasizing how important it will be for Americans to think for themselves, without regard to the news source they normally watch.  How do you tell a lemming to change their behavior?  Can we survive a major constitutional crisis, if we cannot laugh at ourselves? 

There are two things to remember:

1.)  Young people may not remember the Watergate constitutional crisis, but there were no winners!

2.)   We will survive the next constitutional crisis!

Economic Oceanography

As I look out my window, I see the beautiful Chesapeake Bay, where it enters the Atlantic Ocean.  Even though it normally looks placid and peaceful, I know there are many currents I cannot see.   Millions of gallons of water flow by every day, slipping beneath the surface of the Atlantic Ocean as the water drops into the Norfolk Canyon, falling to greater depths.  I cannot see any of this but know it is happening anyway.

The "market" is the same - there is so much that is not visible.  For the month of march, the S&P 500 index of large companies was down 2.54%, flat for the first quarter, but up 13.99% over the past twelve months.

The S&P index of small companies was up 2.04% in March, flat for the first quarter, and up 12.68% for the past twelve months.

Preferred stocks, yielding an average of 6.51% in dividends, were up 0.52% for March, down 0.55% for the first quarter, but up 3.08% for the past twelve months. 

Utilities were up 3.76% for March, down 3.30% for the first quarter, and up 1.89% over the past twelve months.

Technology stocks were down 3.9% during March, up 3.39% for the first quarter, and up a whopping 27.68% over the past twelve months.

So, what does all this tell you?  It should tell you that you are too focused on investment performance in the short term.  All these currents -- and many more -- change constantly.  I've spent many years looking out the window, and the Chesapeake Bay always looks the same.  Warren Buffett famously said he had no idea where the stock market would be next month, but he knew where it would be in ten years -- UP!

Just because so much detailed data is available, it doesn't mean you should care.

Buying Happiness

A recent study found that people experienced greater happiness as their income rose, which is not  surprising.  But, it also found that rate of growth in happiness slows down when income reaches about $75,000 annually.  More money increases happiness less and less.

At that point, spending has a greater impact on happiness than income.  But, the type of spending must fit the personality type.  Some people are more materialistic than experientialist, and some are the opposite.  Some people enjoy having nice things, and some people enjoy having good memories.

Happiness continues to increase when a materialistic person continues to acquire goods and when an experientialist contines to have good experiences.  If an experientialist spends his money on nice things, he will not achieve the same happiness as a materialist.  To increase happiness, the spending must match the personality type.

Of course, the vast majority of people are somewhere in the middle.  After all, who does NOT want a good memory?  The role of the financial planner should fit the client's personality.  I have one client who could happily spend the rest of his life aboard cruises.  Since he can afford it, I encourage him to do so.  I have another client who is fascinated by oriental art and has acquired more than she can afford.  Since it makes her happy, I have to stretch her dollars as best I can.

So, is my job as a financial planner measured by dollars in a client's portfolio, or is my job measured in terms of client happiness?

Loved To Death

In 1919, Congress passed the 18th Amendment to the Constitution, beginning the Era of Prohibition.  None of the earlier 17 amendments were ever as unpopular with the American people as that one.  Fourteen years later, that amendment was repealed.  Yes, an amendment can be repealed.

Former Supreme Court Justice John Paul Stevens has now opined that the Second Amendment should also be repealed, especially since it is so unpopular with the American people.  That amendment theoretically "protects the rights of gun owners."  It has been zealously guarded by the National Rifle Association (NRA), which loves the Second Amendment . . . too much!  The NRA is lead by a blinded, well-meaning zealot called Wayne LaPierre.  He loves kids, like everybody else, but he is blinded by love.  So is the NRA.

The NRA is loving the Second Amendment to death, eventually killing it.  Already, the vast majority of Americans brand the NRA as just another bunch of corrupt lobbyists or even terrorists, and they are correct.  The NRA tarnishes the noble Second Amendment.  They bring blame and shame to the Second Amendment.  If the NRA continues to oppose the American people, it will disappear along with their beloved Second Amendment.  The NRA is the greatest threat to the Second Amendment!

As a true gun lover and former NRA member myself, I pray Wayne LaPierre will protect my gun rights by immediately dismantling the NRA.  Absent that, I  reluctantly agree that the Second Amendment must be repealed.

Reverse Income Averaging

Many novice investors think investing is easy.  All you have to do is stay invested in stocks when the market is rising, but move to cash when the market is falling.  Simple, right?  The stock market is predictable, right?

Numerous studies have found that "market timing" should be left to the hedge fund techies, not the average retail investor.  Those studies have concluded the average retail investor should "buy and hold,"  which means they should not sell their investments just because the market is going down.  One primary reason is that they invariably don't put their cash back into the market at the right time, when the market bounces.  I have long argued this "buy and hold" approach is appropriate for a garden-variety recession, but not for a financial crisis, which happens quicker, goes deeper, and has a longer recovery than recessions.  However, both approaches are based on economic data and financial data.

I'm seeing an interesting new approach, i.e., one that is based on political conclusions.  Some investors have concluded that the Trump Administration will end badly, taking the stock market deep into bear territory.  Unfortunately, they don't know when to get out of the stock market.  They recognize that selling everything now could cause them to miss a good deal of upside, if the bull returns.  If not now, when?

Income averaging is the standard practice of putting the same amount of money into stocks every month.  Reverse income averaging is selling stocks and increasing cash by the same amount each month or quarter.  This can be done by percentage or by dollar amounts.  The downside is that reverse income averaging means you are selling more shares as they get cheaper.  That is the cost of reducing stock exposure over time, while retaining some protection from a major bull market.

I don't know any financial advisors who advocate making investment decisions based on political assumptions, and the alternative is to advise clients they cannot act on their own political beliefs. Reverse income averaging may have come-of-age. 

Good Wars ?

Most people fear trade wars, because they know a trade war can easily become a real-killing-people kind of war.  Most economists fear trade wars, because it destroys the principle of comparative advantage, reducing the standard of living on all sides.  Fortunately, on March 1st of this year, the President assured us that "trade wars are good, and easy to win."  Let us pray . . .

History shows us that "winners" in trade wars only win in the short-run, and everybody loses in the long-run.  But, there is something different this time.  It will be the first time there has been a trade war in a globalized world!  It is not uncommon for a finished good to require parts from a dozen different countries.  The problem of unintended consequences has never been greater.

Some economists believe that policy makers on all sides will retreat from their trade war, once they realize the problem of unknown consequences.  I'm afraid they never heard of machismo.

Some Republicans believe all this is just a negotiating ploy, so that China will do whatever is necessary to resolve the North Korea problem, to avoid the economic damage of a trade war with us.  Others think putting a match to lighter fluid is a better negotiating ploy.  After all, what was the point of announcing a steel and aluminum tariff just before renegotiating NAFTA, only to exempt Canada and Mexico almost immediately?

It is hard for me to see the words "wars are good" actually being said, without feeling intellectually, morally, and emotionally appalled.

Backsliding

For years, I have worried about the impact of too much news-watching.  It can drain a person emotionally and suck them into a "group-think."  It can also make a person very boring.  So, I have practiced a "news-celibacy" day -- voluntarily not watching any news for 24 hours.  In my case, it was Saturday.

Then, I got interested in Michael Smerconish, who is a lifelong Republican that has resisted the far-right pull over the last few years.  He has a one-hour show on Saturday mornings, that I find refreshingly moderate.  So, I have broken my vow of news-celibacy and started backsliding.  After all, watching news is addictive and hard to give up.

Therefore, with all due respect to Mr. Smerconish, I will redouble my efforts to remain news-free on Saturdays.  One day is NOT too much time to take away from political arrogance, the trade war, the never-ending brutality of the mid-east, impeachment, etc.  It will also make you more interesting!

Sorry, Michael!