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The U.S. Army Recruiting Command (USAREC) reported Tuesday that fake texts are informing Americans that they’ve been selected for a military draft and to report to the nearest recruiting station for “immediate departure” to the Middle East.

USAREC confirmed the texts that were widespread and have been sent to many across the country but assures everyone the mass draft texts are fake. 

“Army Recruiting Command has received multiple calls and emails about these fake text messages and wants to ensure Americans understand these texts are false and were not initiated by this command or the U.S. Army,” USAREC said in a blog post. 

Fact check: The @USArmy is NOT contacting anyone regarding the draft.

Text messages currently circulating are false and are not official Army communications.

Read more: https://t.co/csGpTQNfQc

— U.S. Army Recruiting (@usarec) January 7, 2020

The @USArmy is not contacting anyone regarding the draft. If you receive texts, phone calls or direct messages about a military draft, IGNORE them. They are not official communications from the U.S. Army. pic.twitter.com/yABCfQBxLX

— US Army Fort Benning (@FortBenning) January 7, 2020

“The decision to enact a draft is not made at or by U.S. Army Recruiting Command. The Selective Service System, a separate agency outside of the Department of Defense, is the organization that manages registration for the Selective Service,” USAREC said. 

USAREC noted that “If a national emergency necessitates a draft, Congress and the president would need to pass official legislation to authorize a draft.”

The Army said it doesn’t know who is responsible for the mass text. It comes as Iran attacks U.S. military bases in Iraq with more than a dozen ballistic missiles as the threat of a major regional conflict in the Middle East could be nearing.

After the U.S. killed Iranian General Qasem Suleimani last Friday, concerns about war and a military draft among Americans crashed the Selective Service System on Friday. 

The Selective Service System is conducting business as usual. In the event that a national emergency necessitates a draft, Congress and the President would need to pass official legislation to authorize a draft. pic.twitter.com/M4tY2dLoX1

— Selective Service (@SSS_gov) January 3, 2020

Google searches for “military draft age,” “iran,” “world war 3,” “us draft,” “draft exemption,” “draft requirements,” and “is there a ww3” spiked on Friday and were elevated into the weekend. 

The draft was abolished in 1973. However, all men ages 12 to 25 are required to provide their current information to the Selective Service System.

A return of the draft is unlikely at the moment. But if tensions continue to escalate in the Middle East between the U.S. and Iran, then it would be up to Congress to reinstate the draft. 

Via SovereignMan.com,

Local Puerto Ricans invariably tell me I’m overpaying on rent, and that I could have found a cheaper place to live.

I’m sure that’s true. But somehow I’m not upset about my gorgeous view over the ocean and private roof deck.

Beautiful beaches are right in front of me, along with three pools, a gym, and tennis courts.

At the nearby food trucks, Esteban makes a mean margarita. A native Puerto Rican, he recently went from bartending to owning his own kiosk. Same story for the father-son team who owns the ceviche truck.

They have a ton of new business now thanks to all the foreigners who are moving in to take advantage of Puerto Rico’s incredible tax incentives.

That’s why I’m here; I moved down to Puerto Rico last month to take advantage of Act 20, the Export Services Act (now reorganized under Chapter 2 of the Incentives Code).

Much of the work that I do qualifies as ‘exported services’. So I pay myself a salary that is considered reasonable by Puerto Rican standards (the median wage here is less than $20,000 per year).

And the rest of my profit is taxed at just 4%.

I owe no taxes to the US federal government. After all, as a resident of Puerto Rico I can’t vote in Presidential elections, and Puerto Rico’s member of Congress doesn’t have voting power. No taxation without representation.

This is all great for me, but it’s also benefits Puerto Rico.

This is an island that has lost more than 10% of its population over the past several years due to the seemingly interminable, decade-long recession.

As US citizens, Puerto Ricans can move to the mainland and freely live and work just like any other US citizen. And with the local economy having been in the dumps for so long, many of them have done exactly that.

These tax incentives have started to lure wealthy foreigners and entrepreneurs to the island. And when they come, they spend a LOT of money. They invest a LOT of money. They create a LOT of jobs. They generate a LOT of tax revenue.

Puerto Rico benefits. The foreigners who move here benefit. And, by the way, even local Puerto Ricans can receive the same 4% corporate tax treatment… so everyone can benefit. It’s a win/win.

But as we’ve talked about before, Bolsheviks don’t like win/win situations.

Four members of the United States Congress, including the Queen of the Bolsheviks, Rep. Alexandria Occasio-Cortez, sent a letter to the Secretary of the Treasury in December asking him to investigate the fact that “Puerto Rico has become a tax haven from the Federal government.”

They take aim at Act 20 (as well as Act 22, which allows investors to pay 0% on certain investment income.)

These Congress people have no idea what they’re talking about. In the letter, they couldn’t even properly name the tax incentives, mixing up which one was Act 20 and which was Act 22.

They also erroneously claim that the tax incentives “have not resulted in any benefit for Puerto Rico.”

That’s absurd. The government of Puerto Rico itself released a report a few months ago stating that the tax incentives have been incredibly beneficial to the island.

The government states that they have issued 1,680 Act 20 tax grants. And those grantees have generated $210 million in total tax revenue for the island.

That’s taxes across the board– sales tax, payroll tax from any employees hired, the 4% corporate tax, etc.

That works out to be an average of $125,000 in tax revenue for every single person who comes to the island to benefit from the incentives.

Those same 1,680 Act 20 grantees have also created over 16,000 jobs– nearly 10 jobs per person. And the average salary of those jobs is DOUBLE the median household income in Puerto Rico.

Moreover, between Acts 20 and 22, the grantees have invested billions of dollars on the island, injecting much-needed capital into Puerto Rico.

This strikes me as a win/win.

But again, the Bolsheviks don’t like win/win scenarios. They want “the rich” to lose, even if Puerto Rico loses too.

The arrogance of these politicians is astounding. The government here in Puerto Rico passed the incentives, analyzed them, and decided they were working.

But these Bolsheviks think that they should be governing Puerto Rico and making the decisions instead.

It’s the ultimate colonial mentality.

The good news is that Act 20 and Act 22 are essentially a contract with the Puerto Rican government that lasts until at least 2035.

So even if they shut down the programs to new applicants, people who already have their tax incentives established will be grandfathered under the old rules.

That should be a pretty strong motivator to get down here and at least check it out.

And if more Bolsheviks like AOC continue rolling into power, you can count on much higher taxes in the Land of the Free… which makes Puerto Rico even more compelling.

As a final note– we did have an earthquake a few days ago. As usual, though, the stories in the press were totally overblown. Go figure.

With Putin in Turkey on Wednesday ceremonially launching the much-anticipated offshore pipeline TurkStream, which will supply Russian gas to Turkey and southern Europe, it’s actually events in Libya and Syria that are at the top of contentious discussions.

But there appears to have been a breakthrough which may or may not have any real impact on the Libyan war, just days after Turkey controversially ordered troops to Tripoli to the condemnation of pro-Haftar forces and its backers Egypt, the UAE, and Russia.

The Turkish and Russian presidents have called for a ceasefire in Libya that will start from Saturday (Jan.12) midnight, according to Turkish FM Cavusoglu, cited in Turkish state media. 

The two sides issued a statement Wednesday calling for Gen. Khalifa Haftar’s Libyan National Army (LNA) and the Tripoli-based Government of National Accord (GNA) to immediately come to the negotiating table.

As Middle East Eye reports:

Turkish Foreign Minister Mevlut Cavusoglu, speaking alongside his Russian counterpart Sergei Lavrov, said he hopes the ceasefire will embolden the Berlin process seeking to resolve the conflict.

“In a joint statement Presidents Erdogan and Putin urge parties to stop violence” Cavusoglu said. Lavrov added that they expect neighbouring countries to actively join the Berlin process to help end the conflict.

It’s only the GNA which is recognized by the United Nations, and at least still on paper the United States as well — though Trump over the past half-year has issued public praise for Haftar, a dual US citizen considered close to the CIA. 

The crisis has escalated over the past months as Haftar has declared his forces are in the “final offensive” to wrest control of the capital Tripoli from the GNA. On Saturday an LNA airstrike slammed into a military academy in Tripoli, killing at least 30 and injuring nearly 40.

Previewing the urgency of the Libya matter as Putin was set to meet with Erdogan, Turkish media noted: 

Perhaps topping the agenda is Libya – Turkey has deployed troops to support the U.N.-approved government in Tripoli against an assault by the Moscow-backed Libyan National Army, led by General Khalifa Haftar.

Russia has told Ankara that Turkish soldiers should not oppose Haftar’s militias, Deutsche Welle said citing one unidentified official. Erdoğan will assure Putin at Wednesday’s meeting that Turkish soldiers will not enter combat, other officials say.

But we doubt such “assurances” proved enough, given Turkey is already supplying the GNA with advanced military hardware such as drones to push back Haftar’s own small air force, which includes MiG fighters. 

The Turkish and Russian joint statement further called on the US and Iran to “de-escalate tensions and prioritize diplomacy” at a moment the region is on the brink of war after the overnight Iranian ballistic missile retaliation on US bases in Iraq. 

Authored by Patrick Hill via RealInvestmentAdvice.com,

Piper Jaffray forecasts by year end 2020, the S&P 500 (SPX) will hit 3600, a 12.8 % increase. Of eighteen analysts interviewed by Marketwatch only three forecasters expect a decline for the SPX. Will the SPX reach 3600?  The SPX has soared over 400 % from a low of 666 in 2009 to over 3200 at the close of 2019. Mapping the SPX ten year history onto a psychology market cycle map of growth and decline phases poses interesting questions. As the market has zoomed over 400% upwards over ten years, it is clearly in the Mania Phase. Yet, the US economy is growing at the slowest rate of any economic recovery since WWII at 2.2 % GDP per year, why the disconnect?

Source: Patrick Hill – 12-31-19

One reason for the disconnect is investment analysts and the media lead investors to believe there is no downside risk. On New Year’s Eve, Goldman Sachs released a prediction for 2020 claiming that the ‘tools of the Great Moderation’ (Fed policy shift) begun 30 years ago low-interest rates, low volatility, sustainable growth and muted inflation are still in place and were only interrupted by the 2008 financial crisis. Plus we would add the Dotcom crash. GS concluded that the economy ‘was nearly recession-proof.’

The mainstream financial media also feed the Mania Phase with stories like Goldman Sachs declaring the Great Moderation is working with our economy in a ‘new paradigm’. We are to believe there will not be a recession because our policymakers have the economy under control.  Really?  With over $17 trillion of negative debt worldwide to keep the world economy going, central banks have succeeded in sustaining worldwide GDP at 1 – 2 % and falling as of late! For the SPX market to not descend into the Blow Off phase, investors will need to continue to believe in six economic myths:

1. The Growth Phase of the Economic Cycle is Continuing

2. Consumers Will Bailout the Economy

3. The Fed Will Keep the Economy Humming

4. If the Fed Fails Then the Federal Government Will Provide Stimulus

5. The Trade War Won’t Hurt Global Growth

6. The Economy and Markets Are Insulated from World Politics

Let’s look at each myth that is likely to affect portfolio and market performance in the next year.  This analysis is based on research data of economic, social, government, business trends and observation of markets and the economy. If markets are to continue to climb, either policymakers must solve difficult issues or investors must continue to believe these myths are true. The first myth establishes a critical framework for viewing all economic activity. We are actually at the end of the growth phase of the economic cycle; here is why.

Myth 1. The Growth Phase of the Economic Cycle is Continuing

The Fed has reported that the economy is still in ‘mid-cycle’ phase.  We differ with this position as several indicators show the economy is reaching the end of its growth cycle and ready to revert to the mean. As GDP is driven 70 % by consumers, let’s look at what is really happening to consumers.  The ratio of current consumer conditions minus consumer expectations is at levels seen just before prior recessions not mid-stage growth economies.

Sources: The Conference Board, The Wall Street Journal, The Daily Shot – 6/14/19

In the chart below, consumers are stretched as loan default rates are rising despite a 50-year low unemployment rate. Rising delinquencies tend to signal rising unemployment and economic decline is likely in the near future.

Sources: Deutsche Bank, Bureau of Labor Statistics, The Wall Street Journal, The Daily Shot – 6/4/19

Of major concern is that the manufacturing sector is now in a recession based on five months of ISM reports below the 50 % economic expansion benchmark. The overall contraction is validated as 70 % of manufacturing sub-sectors are contracting as noted in the report below.  While the US economy is primarily driven by services, the manufacturing sector has a multiplier effect on productivity, support services, and employment with high paying jobs. Note the contraction in sub-sectors is reaching levels last seen before recessions.

Sources Oxford Economics, The Wall Street Journal, The Daily Shot – 12-20-19

There are other indicators pointing to the end of the growth phase.  For example, the inversion of the 2 – 10 yield curve last summer is now steepening – often seen before an economic slowdown. Another indicator is the number of firms with negative earnings launching IPOs in 2019 was at levels not seen since 2000. Finally, productivity and capital investments are at ten year lows.

Myth 2.  Consumers Will Bailout the Economy

Market pundits have been quick to rely on the consumer to continue spending at growth sustaining rates.  Yet, budgets for the middle class are squeezed as consumers cope with student loan debt payments, new car payments, health care bills, and credit card debt.  The Bloomberg Personal Finance Index dropped significantly in October:

Source: Bloomberg, The Wall Street Journal, The Daily Shot – 11/10/19

Car loans now span seven years on average versus five years a few years ago. Further, the new loans ‘roll in’ debt from previous car purchases due to negative equity in the owner’s trade-in vehicle.  Vehicle price increases up to 10 % over the last year for both cars and trucks add to the debt burden.  Car debt is beginning to weigh on consumers as delinquencies are climbing:

Sources: NY Federal Reserve, The Wall Street Journal, The Daily Shot – 10/29/19

Today, credit card rates are running at a ten-year peak of 17 – 22 % have seen no relief despite the Fed cutting rates.  There is a record spread between the Federal Funds rate and credit card rates as banks seek new revenue sources beyond making loans. Many consumers are turning to credit cards to pay bills to sustain their lifestyle as their wages are not keeping up with rising living costs.

In addition, consumers are increasingly working at more than one job to be sure they can pay their bills.

Sources: Deutsche Bank, Bureau of Labor Statistics, The Wall Street Journal, The Daily Shot – 10/21/19

Workers need to take on multiple jobs in the gig economy. McKinsey & Company estimates that 52 million people are gig workers or a third of the 156 million person workforce. Contractors have no job security.  Gig workers often receive hourly wages with no health, retirement or other benefits. The lack of benefits means they have limited or no financial safety net in the event of an economic slowdown.

There are other key indicators of consumer financial distress, for example, consumer spending on a quarter over quarter basis has continued to decline, Bankrate reports that 50 % of workers received no raise in the last year.  Real wages (taking into account inflation) for 80 % of all workers have been stagnant for the past twenty years.  Uncertain economic forces are putting consumers in a financial bind, for more details, please see our post: Will the Consumer Bailout the Economy?

Myth 3.  The Fed Will Keep the Economy Humming

The Fed has said it will do whatever necessary to keep the economy growing by keeping interest rates low and injecting liquidity into the financial system. However, a survey on Fed actions shows that 70 % of economists interviewed believe the Fed is running out of ammo to turnaround the economy.

Sources: The Wall Street Journal, The Daily Shot – 12-30-19

We agree with their perspective that the Fed is entering an economic space where no central bank has gone before.  In the past, the Fed lowered rates when an economic downturn was evident. Just prior to earlier recession’s interest rates were at a higher starting level of at least 4 – 5 %.  Plus, today the Fed has returned to pumping liquidity into the economy via its repo operation and QE as shown below.

Sources: The Federal Reserve of St. Louis, The Wall Street Journal, The Daily Shot – 12/30/19

The International Bureau of Settlements (BIS) disclosed in their analysis of recent Fed repo operations that funding supported not only banks but hedge funds. A key concern is the nature of the hedge fund bailout. How steep is the loss being mitigated? Is there a possibility of contagion? Is more than one hedge fund involved?  Should the Fed be bailing out hedge funds that are overextended due to speculation? The Fed is already using its tools at the height of the current economic growth cycle. The Fed financial tools are too stretched to turnaround an economy in a recession from multiple financial bubbles bursting.

The Fed continues to declare that inflation is at 2.1 %, missing the reality of what consumers are actually paying for goods and services.  We find from industry research that finds inflation is likely in the 6 – 10% range. Inflation should be defined as price increases of goods and services that consumers buy, not inflation defined by a formula to suit political needs. Using inflation lifestyle ‘cost of living’ data, which is not transparent or available for audit does not meet the foundational data needs of investors.  Gordon Haskett Research Advisors conducted a study by purchasing a basket of 76 typical items consumers frequently buy at Walmart and Target.  Their study showed that from June 2018 to June 2019, prices increased by about 5.5%. 

Other industry research supports inflation running at a much higher level than government figures. On a city by city basis, Chapwood has developed an index for 500 items in major metropolitan areas of the US.  Chapwood reports the average national inflation level to be about 10 %.  Note inflation is compounded; for example, in San Jose a five year average price increase of 13% is for each year. An item costing $1.00 would cost $1.13 the next year and then $1.28 the third year and so forth. It is likely workers caught in a squeeze between stagnant wages and 10 % inflation will not be able to continue to sustain present levels of economic growth.

Real inflation at 6 – 10 % has major policy, portfolio, and social implications.  For example, with the ten year Treasury Bond at 1.90% and inflation at 6 %, we are actually living in a ’de facto negative interest’ economy of – 4.10 %.  Higher inflation levels fit the financial reality of what workers, portfolio managers, and retirees are facing in managing their finances.  Many workers must take multiple jobs and develop a ‘side hustle’ to just keep up with inflation much less get ahead. For portfolio managers, they must grow their portfolio at much higher rates than was previously thought just to maintain portfolio value.  Finally, for retirees on a fixed income portfolio it is imperative they have additional growth income sources or part-time work to keep up with inflation eating away at their portfolio. For more details on our analysis of a variety of inflation, categories see our post: Is Inflation Really Under Control?

One additional assumption about Fed intervention repeated by many analysts is the Fed liquidity injections mean that corporate sales and profits will bounce back.  For some financially sensitive industries this argument may be true. For other firms with excellent credit ratings, they may be able to obtain low-interest loans to ride out falling sales. But, the reality is that corporations build and sell products based on demand. If demand falls, low-interest loans will not increase sales.  Only new products, new channels, reduced pricing, marketing and other initiatives will revive sales.

Myth 4.  If the Fed Fails Then the Federal Government Will Provide Stimulus

European Central Bank leaders have called on European governments to provide economic stimulus for their markets.  Picking up on this idea, analysts have proposed the US government move on infrastructure and other spending programs. However, tax cuts, low-interest rates, stock buybacks, and record corporate debt offerings have shifted a huge balance of world-wide wealth to the private sector.  For 40 years, there has been a significant increase in private capital worldwide while public wealth has declined. In 2015, the value of net public wealth (or public capital) in the US was negative -17% of net national income, while the value of net private wealth (or private capital) was 500% of national income. In comparison to 1970, net public wealth amounted to 36% of national income, while net private wealth was at 326 %.

Source: World Inequality Lab, Thomas Piketty, Gabriel Zucman et al. – 2018

Essentially, central banks, Wall Street, and governments have built monetary and economic systems that have increased private wealth at the expense of public wealth.  The lack of public capital makes the creation of major levels of public goods and services nearly impossible. The US government is now running $1 trillion yearly deficits with public debt at record levels not seen since WWII and total debt to GDP at all-time highs. The development of public goods and services like basic research and development, education, infrastructure, and health services are necessary for an economic rebound. The economy will need a huge stimulus ‘lifting’ program and yet the capital necessary to do the job is in the private sector where private individuals make investment allocation decisions.  Congress may pass an ‘infrastructure’ bill in 2020 but given the election, it is likely to be lightly funded to pass both houses of Congress and receive the president’s signature.

Myth 5.  The Trade War Won’t Hurt Global Growth

By closing the Phase One trade deal, the market has been sighing with relief with observers declaring that trade will resume a growth track.  Yet, the Phase One deal is not a long term fix. If anything, the actions on the part of both governments have been to dig in for the long term.  The Chinese government has taken several key actions in parallel to the deal to move their agenda ahead.

China has quietly raised the exchange rate of their currency to offset some of the impact of still in place tariffs on the U.S. economy.  The government made a major move to block US and foreign companies from providing key technical infrastructure. The technology ministry has told government agencies that all IT hardware and software from foreign firms are to be replaced by Chinese systems within three years. If the Chinese government decides to establish ‘China only’ network standards it may be difficult for US firms to even work with state-sponsored companies or private businesses that must meet China’s only standards. Apple and Microsoft would have to build two versions of their products. One version for the Chinese economy and one for the world.  A critical change is taking place in world trade which is the establishment of a two-block trading world.  China is a key growth market at a 20 % – 30 % increase in sales annually for US multinational companies. For these corporations navigating the trade war will be problematic even with the Phase One agreement.  Our post characterizing this major change in world trade can be found at: Navigating a Two Block Trading World.  

The U.S. has placed sanctions on Chinese sponsored network provider Huawei, effectively limiting the network vendor from US government and private networks.  The Phase One agreement includes the US canceling planned tariffs for December 15th in 2019 and rolling back tariffs to 7.5 % on $120 billion of goods imposed on September 1st of last year. Yet, tariffs of 25 % remain in place on $250 billion of Chinese goods.  The Chinese have canceled retaliatory tariffs planned for December 15th and plan to increase purchases of US goods and services by $200 billion over two years. In addition, China will purchase US agriculture products at a $40 billion rate per year from a baseline of $24 billion in 2017.  If the Chinese follow through on their purchase commitments US companies should see increased sales.  However, history on Chinese purchases shows they forecast large purchases but small purchases are made.

A major trade issue has been created when the US decided not to appoint any new judges to the World Trade Organization court for disputes. The court cannot hear or make decisions on any disputes any longer; meaning countries will resort to free-for-all negotiations on trade disputes.  We expect as economies falter, nationalist policies on trade will gain more popularity and world trade will continue to decline after a slight blip up from the U.S.-China Phase One deal.

Sources: BCOT Research, The Wall Street Journal, The Daily Shot – 12/16/19

Finally, prior to the trade war global trade has been facing major headwinds. Since 2008, global firms have looked to open more international markets to sell their goods, but have met sales resistance causing revenue and profits to be flat or decline.  We expect the flattening of global sales to output to continue and eventually decline as overall world trade falls.

CEOs in a Conference Board survey rate trade as a major concern as they look at a highly uncertain economic picture.  Marc Benioff, CEO of Salesforce, described his concerns at a company all hands meeting last November:

 “Because that issue (trade) is on the table, then everybody has a question mark around in some part of their business,” he said.

“I mean, we’re in this strange economic time, we all know that.”

Myth 6. The Economy and Markets Are Insulated from World Politics

Protests have broken out in Hong Kong, Iraq, Iran, Chile, and other world cities while stock markets continue their climb.  Yet, when the U.S. killed a key Iranian general the overnight S &P futures market fell 41 pts before recovering and closing 23 pts lower. The VIX soared 22 % overnight before settling back to close for a 12 % increase at 14.02.  The U.S. – Iran conflict does not seem to be under control with most Middle East analysts predicting a major retaliation by the Iranian government. The price of oil spiked 4 % before settling to a 3.57 % increase on fears the Iranians may attack oil tankers in the Gulf.  An escalating conflict will drive oil prices higher, disturb supply chains and likely tip the world economy into a recession.

We saw during the negotiations for the Phase One trade deal how rumors both in China and the U.S. would send the S & P futures market up or down by 10 – 15 points depending upon whether the news was positive or negative. Algo traders would drop 30k contracts in a matter of seconds to make huge moves in SPX price, while the VIX was at 12.50, supposedly a calm market. The chart below shows how positive and negative news whipsawed the market.

Source: Liz Ann Sonders – Schwab – 12-7-19

Political news not only moves markets but the economy as well.  When the president tweets a tariff threat, consumers and industry move swiftly to buy those goods before their prices go up.  Businesses have to build the product quickly, sell it and they are left with falling sales as future purchases are pulled forward.  Business to business deals are caught up in this constant flip flop on trade policies as well. CEOs must make investment decisions to build a plant in a particular country 1 – 3 years in advance. They must calculate their allocation plans based on inadequate information and in a highly uncertain policy environment.  Often, rather than make an investment decision, executives will wait for the economic clouds to clear.

Summary:

The current bull market run has set record highs continuously.  Yet, as the saying goes: markets go up in stair steps and down in an elevator.  As a selling panic sets in the market goes into a free fall. If an economic myth is revealed by market action, corporate results, economic reports or an event the loss of belief causes the market to fall much faster than a slow stair step up.

The prudent investor will recognize the end of the business cycle is likely underway. It is time to prepare for an economic slowdown and a resulting equity market reversion to the mean. A reversion to the mean quite often requires that markets swing beyond the mean.

The wary investor will ask hard questions of their financial advisor and review corporate reports with an eye on fundamentals. Financial success is likely to result from good risk management and implementation combined with agility to make mid-course corrections.  Investors should test their assumptions based on breaking trends that may impact portfolio performance.  At the same time, constantly flipping investments will lead to poor performance. Allocate funds to different portfolio groups based on long, medium and short term goals to keep from being emotionally swept up in temporary market swings. The key is to be prepared for the unknown, or a black swan event.  Expect the unexpected and consider the advice of market legends like Bernard Baruch:

“Some people boast of selling at the top of the market and buying at the bottom – I don’t believe this can be done. I had bought when things seemed low enough and sold when they seemed high enough. In that way, I have managed to avoid being swept along to those wild extremes of market fluctuations which prove so disastrous.”

And just like that, it never happened!

The S&P 500 just broke to a new record high…

VIX has crashed back to a 12 handle (VIX futures a 13 handle after nearing 18 overnight)…

Dow futures are up over 600 points from overnight lows…

And WTI Crude crashed back below Soleimani levels below $60…

As gold gives back its sanctuary flow gains…

The invincible market strikes again.