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Do You Have the Right Map?

Having the right map is paramount if you want to arrive at your destination. Navigating the high seas and distant lands requires a detailed map, so does driving across town to pick up a gallon of milk. A map of Los Angeles is of little use in New York. A ski map of Crested Butte provides no guidance on Mt. Bachelor.

Cash is King!

Cash is King! The King is Dead! Long live the King! An unusual thing is happening this year – cash is outperforming stocks and bonds. Allocating your investments to T-Bills has been a winning trade this year.

Rates Have Risen

When interest rates start to rise, stocks will fall. Not only will they fall but our economy will tumble into a recession. Corporate credit will evaporate. Home ownership will cease. All dire consequences.

It’s true, rising interest rates do cause economic headwinds. But rates have been rising. In fact, they’ve risen a lot over the past couple of years.  

A Few Things I Know

Most markets have struggled during the months of October and November causing angst and worry among investors. Media commentators, reporters, and online personalities are bellowing from their pulpits about the pending doom in the markets and economy. If these experts were asked to help contain a fire, they’d bring kerosene.

Too Good to Be True

The Wall Street Journal reported on a firm that went belly-up due to “bad bets on energy prices.” The firm, OptionSellers.com, sold options on future contracts and they suffered a “catastrophic loss” on their trading strategy.[1]

Expectations

At the beginning of each football season every NFL team has high hopes of winning the Super Bowl, even the Cleveland Browns. Enthusiasm and expectations are high.

My Two Best Days

Tommy Lasorda once said, “The best possible thing in baseball is winning the World Series. The second-best thing is losing in the World Series.” He added, “When we win, I’m so happy I eat a lot. When we lose, I’m so depressed, I eat a lot. When we’re rained out, I’m so disappointed I eat a lot.” Mr.

Slow Money

CNBC’s Fast Money is “America’s post-market show to bring you the actionable news that matters most to investors.” The panel of traders discuss stocks, ETF’s, options, and bitcoin. They talk in technical terms and use graphs and charts to highlight their main points.

Models

A few months after the Great Recession a writer for a national magazine asked a simple question: “Did asset allocation models let down the individual investor?” I don’t think they did because conservative models lost less money than aggressive ones during the meltdown. In other words, the models performed as expected.

Correlation: Positive One

A diversified portfolio is always recommended. Balancing your accounts between stocks, bonds, and cash will allow it to grow with less risk than a concentrated portfolio.

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