As we conclude one of the most eventful weeks in recent history, our role as a fiduciary is to deliver perspective in the best interest of all clients and listeners, and is the focus of this week’s NetWorth Radio broadcast.
Perspective begins by reviewing where we stood just 4 short years ago. We held a client event the night after the 2012 election. Those on the right were fearful. Congress shifted left and President Obama was firmly re-elected. The temptation for the right side of the room was pessimism. Our message that night:
Keep Calm, Carry On!
The recommendation stands now to own great assets that pay real income, and sell them if they become overpriced. That evening in 2012, the Dow was about 12,500 and optimism was difficult for those that disagreed with the outcome. The equity markets stand almost 50% higher today. Cautious optimism, in hindsight, was the best course of action.
Many clients were anxious and overly focused on this election. One of the recommendations that I made to many clients was simply to listen to interviews with Warren Buffett for perspective.
The events in the global financial markets this week were, in many ways, unprecedented. At approximately 3am as the election results became clear, equity futures traded limit down, about 5% with the Dow falling near 17,400 in the pre markets. By the end of the day on Wednesday, the Dow climbed back to near record highs, over 18,500 setting the stage for a new all time high on Thursday.
The underlying story may have been telegraphed by the bond market. US Treasury yields spiked dramatically over ¼% on the 30 year term. The 20 year US Treasury dropped in value by 4% in a single day.
Was the message growth and inflation for 2017 and beyond? That conclusion was reasonable based upon the events the week. This week’s program also includes lessons from the 2004-2007 Federal Reserve tightening that provided long term opportunity for gains. Investment profits may require a politically neutral perspective driven by enlightened self interest.
Headline Round Up!
*Pipeline Surge! The Major Texas Pipelines Spiked: Apparent Anticipation of New Energy Policy.
*Texas Bank Stocks!
*Amazing Rally in Financials.
*T Bill Telegram: .44% On the US 90 Day Bill Signals December Fed Move on Fed Funds Rate.
*Half a Hertz? Hertz Global Holdings Falls 52% in a Single Day. Carl Icahn Holds About 16%. Ouch!
*Black Gold Rush: Despite Oil Prices Near $45, Record Prices Continue for Permian Properties. What Does This Tell Us? Energy Infrastructure Could Provide Effective Inflation Protection and Appreciation.
*Travel Boom! Priceline Tops $1,575 per Share!
*Corporate Tax Fight: Ireland Fights EU Tax Bill for Apple. Should Ireland Punt the EU?
*Bloomberg Estimates Over $300 Billion in Government Bond Value Lost in a Single Day!
Rather than issue a series of detailed 2017 predictions which will likely be rendered wrong at some point during the year, the greatest potential for 2017 profit could be a tactical rebalancing plan designed to provide benefits from potential 2017 events.
This week’s program features a forward looking set of possible outcomes for the global financial markets between Halloween 2016 and the end of 2017 to provide guidance founded on the objective of producing superior profits which are not currently available in assured investments.
Thank you for joining us in a special edition of NetworthRadio: 2017 Tactical Rebalancing.
Cash Deployments and Tactical Rebalancing
If Dow near 16000, then dividend companies?
If discounts widen in high yield funds, then accumulate discount income funds?
If Dow near 19000, then harvest REITS and growth positions?
Interest Rates Rise:
If rates spike, then discount municipal bonds?
Long Interest Rates Fall:
If bond funds hit premiums, then harvest?
If oil exploration companies correct to a reasonable earnings based valuation, then add pipelines and energy infrastructure?
Featured Research Solutions:
Investors are invited to improve decision making with a comprehensive tour of global economics, indicators, and actual results.
*Election Impact: What Will the 2016 Elections Mean for Investors?
*Senior Loans: Opportunity?
*A Lonely Optimist: Bob Doll’s Outlook for 2017
*Since 2001, our current tracking system has provided unique intelligence for decision making.
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