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My 86-year old mother - weed stocks (07-19-18)
I bet you that title got your attention! A month ago I received a phone call from my mother and she asked me a question that I've heard multiple times from retirees over the last four or five years.  How do I exactly buy some of these companies that are selling this marijuana?   My mother said ....CONTINUE READING

Fed Raises Rates for the 7th Time (07-05-18)
I listened to our new Fed chairman, Jerome Powell, on June 13th, 2018. It was refreshing to hear the new Fed chariman speak in actual plain English.  His predessors, both feds and economists, were so .......
CONTINUE READING

I have met the World's Worst Investor (5-22-18)
Over the years, I have had many clients comment to me during our initial meeting claiming to be the worst investor. I have finally met the world's worst investor last week ! He was an aeronautical engineer and he creates and runs .......
CONTINUE READING

My Favorite Chart (4-23-18)
I have used an updated version of this chart for 20+ years. It represents what a long-term structural markt looks like (sometimes called a secular market). I ahve received many questions about how long this bull market ....
CONTINUE READING

Who Dunnit? February stock market (02-16-18)
You as an investor have witnessed stock market declines of 1,000-points in just the first week or so of February. It's been quite a while since we have seen this kind of  ....CONTINUE READING

Can the 2018 Stock Market outperform 2017 returns? (01-15-18)
I don't think anyone can argue that the last year in the stock market was about as good as you could've hoped for.  However, going into 2018,a week goes by when I do not field questions about what direction the market is heading....CONTINUE READING

What Kills a Bull Market? (09-29-17)
Not a week goes by when I do not field questions about what direction the market is heading.  "The media pronounces that tomorrow at 9:30 sharp the market is going to crash." " The market is going down because of the presidential job approval." "The market is toast because of BREXIT." "The market is going to bust because of the .....CONTINUE READING

What is the Market cooking ?(08-24-17)
I A former professional wrestler called "The Rock" is on TV, movies, and Netflix. You pretty much can't go anywhere without seeing the personality of "The Rock." As a former wrestler, he had build his entire career on jumping up on the rope and getting the crowd psyched up by saying, "Can you smell what The Rock is cooking?" And now The Rock is thinking about running for president !  I will get back to The Rock in a little bits, but let's talk about ....CONTINUE READING

My Favorite Chart    (05-19-17)
I have used an updated version of this chart for 20+ years. It represents what a long-term structural market look like (sometimes called a secular market). I have received many questions about how long this bull market can last, and I always reference this chart to show that structural markets last for a very long time. Let me elaborate a little more on that.  When we look at the chart it says .....CONTINUE READING

Houston, all systems go!   (03-22-17)
Do you remember when America was on the way to the moon? Or perhaps you were too young to have seen some of the Apollo missions/rockets (years 1961 - 1975). Back then, we only had three channels on the television and the whole nation watched the countdown to the major rocket launches (i.e. Apollo Missions). Luckily for me ......CONTINUE READING

One Chart that Explains it All (02-06-17)
It's all about growth in the economy, or lack of.  Take a look below at the wonderful chart done by Oppenheimer that shows GDP (gross domestic product) since 1966 [1].  It presents an average of about 3% GDP growth.  Well, in the last eight or nine years it has been subpar. Many of .....CONTINUE READING

Is It Morning in America ? (11-16-16)
My son Nick is in a one-year countdown to exiting college and going into the job market fulltime.  He recently asked me if the election results could affect future employment opportunities.  I said,  "Nick, don't focus on politics.  Instead focus on the ............CONTINUE READING

Bull Markets Don't Die of Old Age.... Recession (8-31-16)
I have been asked numerous times how long do bull markets last? Perhaps a pundit has been on television describing the reason why the market cannot go up, because the market has aged past the normal .......CONTINUE READING


My 86-year-old Mom - Weed Stocks

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My 86-year-old Mother wanted to buy weed stocks

I bet you that title got your attention! A month ago I received a phone call from my mother and she asked me a question that I've heard multiple times from retirees over the last four or five years.  How do I exactly buy some of these companies that are selling this marijuana? 

My mother said it looked like a tremendous new business opportunity.  I replied to her with what I've been telling investors for years.  This is a real tough area to buy anything and yes, there's definitely huge potential, but it may be too soon. Some reasons are:

-   Marijuana is still federally prohibited, so it forces any of these operations to deal strictly on cash.I can't imagine a business today that doesn't have a bank account or a checking account, but the banks can't take the money.And if they did, it is considered money laundering.

-  Most of these stocks are what are called penny stocks. There is very little data, they are extremely risky to buy, and you see them come and go quickly.

-  Their direct competition is the alcohol and tobacco industries.These two industries stand to lose a tremendous amount.Fact is, in states where pot is legalized, beer and cigarette sales go down quite dramatically <1>.I don't want you to think that these industries are going to lose their profits to a bunch of potheads out back that are growing weed.It's not going to happen like that.

-  When there's so much disruption, you have to wait until the legitimate players step in to dominate the market. And I don't believe that the legitimate big players will step in until the feds loosen up the federal laws concerning marijuana.

So where exactly does that leave the interested investor that believes that there's going to be a tremendous business opportunity here? Again, I’d say it's a wait and see game here.
Some points of interest:

 

-  Already, there are two or three big alcohol companies that are now invested in technology that allows them to infuse alcohol with THC (Tetrahydrocannabinol).THC is a chemical responsible for most of marijuana's psychological effect.So great, now, not only are people going to be getting intoxicated by the alcohol, they're going to be getting stoned at the same time.I’m sure that’s just what America needs. People both intoxicated and stoned.Did you catch the sarcasm there?

-  There is also a recent trend called Vaping marijuana. As Truth on Pot Explains, “the combustion of marijuana still produces several known carcinogens and tar, which can irritate the lungs and lead to chronic bronchitis. Vaporizers were mainly designed to overcome this issue. By heating marijuana at a lower temperature than combustion, the devices produce an inhalable vapor that still contains the active medical ingredients in marijuana (cannabinoids), but without the harmful by-products. Vaporizing cannabis is said to remove approximately 95 percent of the smoke that is inhaled. What’s more, vaporizing has been suggested to increase the yield of anti-inflammatory terpenoids that protect the lungs from irritation.” Right then.   <2> I’m not saying everyone who uses a Vapor, smokes marijuana out of it. People just want to look cool.

-  Remember decades ago when they had the Marlboro man who had that cowboy look to him?I guess he was selling brand name Marlboro cigarettes. He kind of even looked like Clint Eastwood back then.And then, of course, we have the most interesting man in the world, and he does beer commercials for Dos Equis beer. His slogan says “Stay thirsty my friends”. Now, I believe we will see TV commercials showing people Vaping pot and or ingesting it through alcohol because that is much cooler than seeing a bunch of middle-aged people sitting around eating marijuana brownies.

-  Next time you go in the gas station for something, take a look at what I unfortunately call the wall of cancer.There's normally a whole wall of cigarettes, tobacco cigars, and smokeless tobacco.I'm always amazed when you go inside there and see somebody buy $20 of gas and spend $45 on cigarettes.Just imagine up on the wall of cancer, do you have your cigarettes there with all the different brands? They have big cigars there with all different brands. And then in the next display, so to speak, here's marijuana for Vaping. Or here are marijuana buds for sale. Cigarette companies know how to sell, grow, package, and distribute their products.And they've got distribution centers all throughout the country, and, indeed, the world.

-  Another interesting avenue to indirectly invest into would be that there are a few fertilizer companies out there and fact is they're starting to buy hydroponics companies.Apparently, pot is grown inside laboratories, so it’s valuable.You could find some of these companies and you could just Google Fertilizer Company that owns a hydroponic company.This is just an indirect way to take advantage of this opportunity.

To sum it up

- I  do believe buying individual small penny stocks is risky business.

-  It's really just too hard to get reliable information on the small start up.

-  This is a massive industry that's coming down the line.
 

- I do believe the medical application is valid.

So, if you’re still thinking of buying some of these small penny stocks, I would consider buying an ETF.  An ETF is an exchange traded fund of which would own probably 20 or 30 different companies.

One thing I've learned about investing over the years, sometimes the early bird doesn't get the worm.  The early bird gets eaten by the hawk, so be patient.  In most cases, the bigger players will step in and dominate the industry.  I do believe this will happen, once the federal issue is resolved.

Sincerely,

John Romano CFP®
 

Footnotes:  

<1> https://www.forbes.com/sites/thomaspellechia/2018/01/22/alcohol-sales-dropped-15-percent-in-states-with-medical-marijuana-laws/#7e7fd0845f22

<2>  https://www.bustle.com/articles/77073-7-reasons-to-vaporize-weed-instead-of-smoking-it-you-modern-woman-you

John Romano, CERTIFIED FINANCIAL PLANNER™, has over 30 years experience in the financial field. John is a Registered Representative with Securities America, Inc. (member of the FINRA and SIPC), and an Investment Advisor Representative with Securities America Advisors. He has prepared hundreds of reports for retirees to assist in their retirement income planning needs. He is dedicated to providing portfolio analysis, dividend and income information, and investment management services to retirees (and those preparing to retire) in The Villages, Florida, and throughout the United States.

The opinions and forecasts expressed are those of the author, and may not actually come to pass. This information is subject to change at any time, based on market and other conditions and should not be construed as a recommendation of any specific security or investment plan. Past performance does not guarantee future results.

Securities offered through Securities America, Inc. Member FINRA/SIPC, John Romano CFP® Registered Representative. Advisory Services offered through Securities America Advisors, Inc. John Romano Investment Advisor Representative. Romano Income Strategies and Securities America are not affiliated.

Trading instructions sent via e-mail may not be honored. Please contact my office at (352)753-8590 or Securities America, Inc. at (800) 747-6111 for all buy/sell orders. Please be advised that communications regarding trades in your account are for informational purposes only. You should continue to rely on confirmations and statements received from the custodian(s) of your assets. The text of this communication is confidential and use by any person who is not the intended recipient is prohibited. Any person who receives this communication in error is requested to immediately destroy the text of this communication without copying or further dissemination. Your cooperation is appreciated.

John Romano CFP®
305 Skyline Drive, Suite 3, Lady Lake, FL 32159

Phone: 352-753-8590

Email:  John@RomanoJohn.com
Website:   
http://www.RomanoJohn.com/

 


Fed raises rates for the 7th time

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Fed Raises Rates for the 7th Time 

I listened to our new Fed chairman, Jerome Powell, on June 13th, 2018.  It was refreshing to hear the new Fed chairman speak in actual plain English. His predecessors, both feds and economists, were so longwinded with so many disclaimers, by the time they got to the meat of the program; most people had already changed the channel.

Why should you care?

Well, you should probably care if you have a credit card, auto loan, mortgage, more than $10,000.00 in a Money Market CD or you own a bond.  You should definitely care if you’re an investor Many advisors like myself believe that the Fed, through higher rate, actually end up causing recessions which the precursor to recessions is normally the market’s meltdown.  Do you remember the years 2000-2002 and 2008-2009?  I want you to take a look at this chart.

 

 

 

 

 

 

 

 

 

Note: Rate is the federal funds rate until Sept. 27, 1982, the federal funds target rate until Dec. 15, 2008, and thereafter it is the upper limit of the federal funds target rate range. | Source: Federal Reserve  <1>

<1>  https://www.nytimes.com/interactive/2018/business/economy/fed-rates-powell.html

Focus on the chart around 2005, 2006, 2007 and 2008. The Fed raised rates and then poof, in 2008, the economy melted down.  Therefore, we had a big recession. Can you remember back to the late 1990’s when the economy was doing great?  From 1997-1999 the Fed raised rates to cool things down.  Do you remember the last recession we had with the accompanying bear market?  A lot of people have even forgotten about that recession that was caused in 1990.

Do you see where the Fed was raising rates before that?  And it makes sense if you think about that.  For example, let’s say you have a 4% mortgage today and the Fed raises rates to where the mortgage rate goes up to an equivalency of 6% - 7%.  How many people do you know who’re going to go buy a new home and pay many thousands of dollars more per year on interest payments?  I can guarantee you probably not too many.  How many people do you know that would go from a 7% auto loan to a 10% or 11%? Not many if any. So, this is how the Fed tries to manage the economy. 

Now remember, their mandate is just two things: to try to keep inflation around the 2% level and full employment.  Their mandate is not to drive up the stock market. The good news is the tide is still coming in, but maybe we need to start repositioning the boat in deeper water so we’re not stranded when the tide starts going out (recessions).

 

Sincerely,
John Romano, CFP®

 

=======================

Footnote:   

<1>  https://www.nytimes.com/interactive/2018/business/economy/fed-rates-powell.html

John Romano, CERTIFIED FINANCIAL PLANNER™, has over 30 years experience in the financial field. John is a Registered Representative with Securities America, Inc. (member of the FINRA and SIPC), and an Investment Advisor Representative with Securities America Advisors. He has prepared hundreds of reports for retirees to assist in their retirement income planning needs. He is dedicated to providing portfolio analysis, dividend and income information, and investment management services to retirees (and those preparing to retire) in The Villages, Florida, and has clients throughout the United States.

The opinions and forecasts expressed are those of the author, and may not actually come to pass. This information is subject to change at any time, based on market and other conditions and should not be construed as a recommendation of any specific security or investment plan. Past performance does not guarantee future results.

Securities offered through Securities America, Inc. Member FINRA/SIPC, John Romano CFP® Registered Representative. Advisory Services offered through Securities America Advisors, Inc. John Romano Investment Advisor Representative. Romano Income Strategies and Securities America are not affiliated.

Trading instructions sent via e-mail may not be honored. Please contact my office at (352)753-8590 or Securities America, Inc. at (800) 747-6111 for all buy/sell orders. Please be advised that communications regarding trades in your account are for informational purposes only. You should continue to rely on confirmations and statements received from the custodian(s) of your assets. The text of this communication is confidential and use by any person who is not the intended recipient is prohibited. Any person who receives this communication in error is requested to immediately destroy the text of this communication without copying or further dissemination. Your cooperation is appreciated.

 

305 Skyline Drive, Suite 3, Lady Lake, FL 32159

Phone: 352-753-8590

Email:  John@RomanoJohn.com


I have met the World's Worst Investor

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I have met the World's Worst Investor 

Over the years, I have had many clients comment to me during our initial meeting claiming to be the worst investor. I have finally met the world’s worst investor last week! He was an aeronautical engineer and he creates and runs very detailed spreadsheets on investments. He checks his investments at least two to three times a day. He handles 50% of his money and he has an advisor handles the other 50% of his money. His advisor who he has never met face to face has only been in the business less than 10 years and he just seemingly has no clear cut investment plan.

In my first interview I normally ask a discovery question - How would that person rate themselves as an investor on a scale of 1 to 10, with 1 being awful and 9 or 10 being Warren Buffet.  (By the way, most people give themselves a rating around 4.)  Well, this gentleman said that he wasn’t even a 1, but a negative 10!  He told me he sells at the low and he buys at the high.  And during bad markets, his investment strategy is to hide the statements from his wife!  Furthermore, during really bad markets, he doesn’t even open his statements.  He is continuously looking for hot tips from brokers and on the internet.  He watches the news all the time and trades on world or political events with a gut feeling.  He believes that he’s close to coming up with the next great stock tip. He can feel it in his bones.

During this meeting he said, “Well, John, couldn't you just give me some basic investment advice?”  I said, “Sure, after talking with you briefly there might be a couple areas you might want to alter…
 

1  It doesn’t sound that you’re doing very well on part of the money, so fire yourself (obviously, this is not your skill set).

2  If your advisor has not gotten you market-like returns in the last eight, nine, or ten years, during one of the best bull markets - Fire him.

3  Find an advisor with at least 20 years of experience and let him explain his investment process.If the advisor can’t verbalize it in two or three sentences, keep looking.”

Now, I believe these parameters are important because you want an advisor who has been around for at least two bear markets.  Remember, it’s possible that the next bear market could permanently affect your standard of living for the rest of your life. I’m not predicting the next bear market is around the corner, but I know it’s sooner versus later.

It is important to understand your advisors investment process.  What is the investment plan when things are going good? Even more importantly, what exactly is going to happen when things go bad? Now, I’m not asking you to understand the intricacies of efficient market theory and/or a Monte Carlo simulation, but an advisor should be able to get this out in three or four sentences. 

Relative Strength

If you are a client, or have ever met me through a workshop, or have come to meet with me at the office, you know what I’m all about…  It’s relative strength.  This is the investment process that I have been using for last couple of decades.  It is a simple process of rotating money into asset classes that are outperforming other asset classes and going with the current winners.

 It’s about finding the winners/sectors and letting them run.  It’s also about getting rid of the losers.  Ultimately, it is all performance based, rules based, and it allows you to ignore the 24/7 news cycle.  So the key to investing in using relative strength is to find out what is working now and position your money into the asset classes that are outperforming the other asset classes.  Now, these asset classes could be CDs, bonds, stocks, and even cash.

Relative Strength works in other areas, too

If you have ever bet on a sporting event, whether it is basketball, football, or even a horse race, there are always odds given out. The odds that are done by the book makers are based on performance on head to head competition against other competitors of that arena. Relative strength can also be applied to fishing as well. You can talk to many fishermen out there and a lot of them will say it’s the equipment that matters, or how big your boat is, or how big your motor is, or it’s the bait you’re using that is what catches the most fish... But really, the key is to find where the fish are biting and go there! Even if you have lousy equipment and a slow boat, you have a higher probability of catching fish rather than if you had a fast boat, new fishing equipment, and there’s no fish in the vicinity. Many of my readers know that I am an avid saltwater fisherman.  You can follow my weekend fishing exploits on Facebook at https://www.facebook.com/john.romano.94801

I’ve been fishing my whole life and I apply the concept of relative strength to fishing as well. Fishing is pretty simple and it mainly has one parameter. Some spots that I have used only work for a few trips and then some of the better honey holes I have seen work for decades. And if you already follow my fishing Facebook page, you know there is not a lot of narrative.  It’s all performance based!   Posted during the week, there are either pictures of me catching fish or there’s not.  That tells you exactly how we did over the weekend.

Stay Retired,

John Romano, CFP

John Romano, CERTIFIED FINANCIAL PLANNER™ has over 30 years experience in the financial field. John is a Registered Representative with Securities America, Inc. (member of the FINRA and SIPC), and an Investment Advisor Representative with Securities America Advisors. He has prepared hundreds of reports for retirees to assist in their retirement income planning needs. He is dedicated to providing portfolio analysis, dividend and income information, and investment management services to retirees (and those preparing to retire) in The Villages, Florida and surrounding areas. He is a member in good standing of the Financial Planning Association (FPA).
The opinions and forecasts expressed are those of the author, and may not actually come to pass. This information is subject to change at any time, based on market and other conditions and should not be construed as a recommendation of any specific security or investment plan. Past performance does not guarantee future results

Securities offered through Securities America, Inc. Member FINRA/SIPC, John Romano CFP® Registered Representative. Advisory Services offered through Securities America Advisors, Inc. John Romano Investment Advisor Representative. Romano Income Strategies and Securities America are not affiliated. Trading instructions sent via e-mail may not be honored. Please contact my office at (352)753-8590 or Securities America, Inc. at (800) 747-6111 for all buy/sell orders. Please be advised that communications regarding trades in your account are for informational purposes only. You should continue to rely on confirmations and statements received from the custodian(s) of your assets. The text of this communication is confidential and use by any person who is not the intended recipient is prohibited. Any person who receives this communication in error is requested to immediately destroy the text of this communication without copying or further dissemination. Your cooperation is appreciated.

305 Skyline Drive, Suite 3, Lady Lake, FL 32159

Phone: 352-753-8590

Email:  John@RomanoJohn.com

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My Favorite Chart

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My Favorite Chart  

I have used an updated version of this chart for 20+ years. It represents what a long-term structural market looks like (sometimes called a secular market). I have received many questions about how long this bull market can last, and I always reference this chart to show that structural markets last for a very long time. Let me elaborate a little more on that. When we look at the chart and it says we are in a structural bull market, it doesn’t mean that you don’t have short term bear markets and/or corrections. Over a longer period of time (structure) the market trends up in a bull market on an average of 14 years and the same goes for a bear market. When I started the business in 1981 a structural bear market had been happening from 1966-1981. Needless to say, many investors were not too excited about U.S. Equities in 1981.

 

 

 

 

 

 

 

 

 

[1]https://oxlive.dorseywright.com/research/bigwire/2017/05/11/05-11-2017

5 take-aways:

The investor who was buying shares at a depressed cost over time from 1966-1981, normally called Dollar Cost Average (DCA) , did extremely well during the 80’s and 90’s because they had bought so many shares when the share price was depressed.

The retired investor during this bear market did very poorly because of the price declines unless they changed strategies.

There were other markets to consider investing during this particular bear market; Emerging Markets, Real Estate, High Interest, and Commodities.

The key is to know what kind of market you are in and if it is not proven profitable to switch to a different market.

As the chart shows, we are in a structural bull market until we are not. Sincerely,

John Romano, CFP®

References:

[1]https://oxlive.dorseywright.com/research/bigwire/2017/05/11/05-11-2017

John Romano, CERTIFIED FINANCIAL PLANNER™, has over 30 years experience in the financial field. John is a Registered Representative with Securities America, Inc. (member of the FINRA and SIPC), and an Investment Advisor Representative with Securities America Advisors. He has prepared hundreds of reports for retirees to assist in their retirement income planning needs. He is dedicated to providing portfolio analysis, dividend and income information, and investment management services to retirees (and those preparing to retire) in The Villages, Florida and surrounding areas. He is a member in good standing of the Financial Planning Association (FPA).

Past performance does not guarantee future results. An investor cannot invest directly in an Index. Dollar cost averaging involves continuous investment in securities, regardless of the fluctuating price levels. Investors should consider their ability to continue purchases through periods of low price levels or changing economic conditions. Such a plan does not assure a profit and does not protect against loss in declining markets

Securities offered through Securities America, Inc. Member FINRA/SIPC, John Romano CFP® Registered Representative. Advisory Services offered through Securities America Advisors, Inc. John Romano Investment Advisor Representative. Romano Income Strategies and Securities America are not affiliated.

Trading instructions sent via e-mail may not be honored. Please contact my office at (352)753-8590 or Securities America, Inc. at (800) 747-6111 for all buy/sell orders. Please be advised that communications regarding trades in your account are for informational purposes only. You should continue to rely on confirmations and statements received from the custodian(s) of your assets. The text of this communication is confidential and use by any person who is not the intended recipient is prohibited. Any person who receives this communication in error is requested to immediately destroy the text of this communication without copying or further dissemination. Your cooperation is appreciated.

305 Skyline Drive, Suite 3, Lady Lake, FL 32159

Phone: 352-753-8590

Email: John@RomanoJohn.com

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View our New Blog at : http://www.RomanoJohnBlog.com/

View our Website at:    http://www.RomanoJohn.com/

 


WhoDunnit?  February Stock Market    

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Who Dunnit?  

You as an investor have witnessed stock market declines of 1,000-points in just the first week or so of February.  It's been quite a while since we have seen this kind of volatility in the market.  Really, everybody wants to know “Whodunnit?”

If it looks like a correction, feels like a correction and acts like a correction

You guessed it, it is probably a correction!  I will answer the question of “Whodunnit?”at the end of this newsletter. Any down days in the market with big number swings will bring out the experts and now obviously everybody is interested in knowing what caused this drop.

Yes, Mildred, we have been in a long-term 9-year Bull Market, however, after all the Bear Markets I've been through, and the ones I've studied, they were caused by recessions.  Think back to years 1973 – 1974 recession, 2000 – 2002 recession, 2008 -2009 recession…

We are not in a recession

It is almost a paradox because our economy (whether you measure it by GDP, Incomes, Unemployment, Home Sales, or Corporate Profits) is sizzling.  So it appears that we're not in a recession-caused Bear Market. I believe we are in a correction.

What is a correction?

Corrections happen more than Bear Markets.  A correction consists of a 10 percent draw down from a market high.  In the last 50 or 60 years, we have about 10 corrections per decade or about 1 per year.  And our last correction was in January of 2016. 

If a correction is identified by a 10 percent draw down, as of Friday the 9th of 2018, the Dow and S&P were down approximately 10 percent.  At this time, because the economy is doing so well, I don't see a Bear Market draw down caused by a recession.  

Most corrections are over in a matter of weeks or months.  You can expect more volatility until the market finds a footing.  And so now, yes, I will answer the question of “Whodunnit?”….  And of course, you know, the Butler did it!   

Sincerely,

John Romano,  CFP®

John Romano, CERTIFIED FINANCIAL PLANNER™ has over 30 years experience in the financial field. John is a Registered Representative with Securities America, Inc. (member of the FINRA and SIPC), and an Investment Advisor Representative with Securities America Advisors. He has prepared hundreds of reports for retirees to assist in their retirement income planning needs. He is dedicated to providing portfolio analysis, dividend and income information, and investment management services to retirees (and those preparing to retire) in The Villages, Florida and surrounding areas.

The opinions and forecasts expressed are those of the author, and may not actually come to pass. This information is subject to change at any time, based on market and other conditions and should not be construed as a recommendation of any specific security or investment plan. Past performance does not guarantee future results.

Securities offered through Securities America, Inc. Member FINRA/SIPC, John Romano CFP® Registered Representative. Advisory Services offered through Securities America Advisors, Inc. John Romano Investment Advisor Representative. Romano Income Strategies and Securities America are not affiliated. Trading instructions sent via e-mail may not be honored. Please contact my office at (352)753-8590 or Securities America, Inc. at (800) 747-6111 for all buy/sell orders. Please be advised that communications regarding trades in your account are for informational purposes only. You should continue to rely on confirmations and statements received from the custodian(s) of your assets. The text of this communication is confidential and use by any person who is not the intended recipient is prohibited. Any person who receives this communication in error is requested to immediately destroy the text of this communication without copying or further dissemination. Your cooperation is appreciated.

305 Skyline Drive, Suite 3, Lady Lake, FL 32159

Phone: 352-753-8590

Email:  John@RomanoJohn.com

---------------------------------------------------------------------------------------

Visit our Website at   http://www.RomanoJohn.com/

 


Can the 2018 Stock Market outperform 2017 ?

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Can the 2018 Stock Market outperform 2017 ?

I don’t think anyone can argue that the last year in the stock market was about as good as you could’ve hoped for.  However, going into 2018, there are some important key factors that contribute to where we stand: 
 

  • Tax cuts will hit people’s paychecks and about 80% of workers will see a modest rise of disposable income.(Remember GDP, the most important economic barometer, is composed of 70% of the consumer spending money.) I believe this tax savings will be spent boosting and strengthening the economy.
     

  • Corporate tax rates are not only dropping significantly, but will put U.S. corporations in a very competitive situation with other countries.Corporations will have a huge incentive to reparate the hundreds of billions of dollars that are overseas back to the United States.(The money was held hostage due to the high corporate tax rates here in the U.S.) Some of this money will no doubt go back into the economy through capital expenditures or dividend payouts to shareholders.
     

  • Oil prices have not only gone up, but have stabilized around $55 to $60 per barrel which allows probably the largest lagging sector in the U.S. to start turning profit.The stocks in that industry have made decent moves in the last couple months.
     

  • For the first time in 8 or 9 years, the international markets have outperformed the domestic markets and this could foreshadow where higher future returns may come from.
     

  • Quarterly GDP numbers are at the highest point they have been in a number of years. And many economists see it staying around the crucial 2.5% to 3% rate.This signifies an economy that is firing on all cylinders.
     

  • Inflation is holding below the Feds 2% target rate, so even though the Fed has and is continuing to raise rates, they should continue at a measured slow pace.

    I believe that 2018 will NOT be an exact repeat of 2017. I also still see a 20 - 30% upside on the DOW (30,000 to 32,000 in the next 12 to 18 months.)  Even if the domestic markets start to falter or weaken, the returns in the international markets may have just started.

    Remember the stock market does not die of old age, but of recessions (For example, our last 2 major recessions were from 2000 – 2002 and 2008 – 2010).  Most recessions are started by the Feds raising rates aggressively to cool down an overheating economy.  The good news here in the United States, is that we have not had an overheated economy for years.  So stay retired and have a great 2018!


    Sincerely,

    John Romano, CFP

John Romano, CERTIFIED FINANCIAL PLANNER™ has over 30 years experience in the financial field. John is a Registered Representative with Securities America, Inc. (member of the FINRA and SIPC), and an Investment Advisor Representative with Securities America Advisors. He has prepared hundreds of reports for retirees to assist in their retirement income planning needs. He is dedicated to providing portfolio analysis, dividend and income information, and investment management services to retirees (and those preparing to retire) in The Villages, Florida and surrounding areas. He is a member in good standing of the Financial Planning Association (FPA).

The opinions and forecasts expressed are those of the author, and may not actually come to pass. This information is subject to change at any time, based on market and other conditions and should not be construed as a recommendation of any specific security or investment plan. Past performance does not guarantee future results.

Securities offered through Securities America, Inc. Member FINRA/SIPC, John Romano CFP® Registered Representative. Advisory Services offered through Securities America Advisors, Inc. John Romano Investment Advisor Representative. Romano Income Strategies and Securities America are not affiliated. Trading instructions sent via e-mail may not be honored. Please contact my office at (352)753-8590 or Securities America, Inc. at (800) 747-6111 for all buy/sell orders. Please be advised that communications regarding trades in your account are for informational purposes only. You should continue to rely on confirmations and statements received from the custodian(s) of your assets. The text of this communication is confidential and use by any person who is not the intended recipient is prohibited. Any person who receives this communication in error is requested to immediately destroy the text of this communication without copying or further dissemination. Your cooperation is appreciated.

305 Skyline Drive, Suite 3, Lady Lake, FL 3215

Phone: 352-753-8590

Email:  John@RomanoJohn.com

--------------------------------------------------------------------------------------------

View our updated Website http://www.RomanoJohn.com/

 

See “Resources” for Articles, Calculators, Newsletters, and Videos: http://www.romanojohn.com/learning_center/

 

See “Market Watch” for Detailed Quotes, Symbol Lookups, or Markets at a Glance: http://www.romanojohn.com/market_watch/

 

 


     What Kills a Bull Market  ?

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What Kills A Bull Market?

Not a week goes by when I do not field questions about what direction the market is heading.
“The media pronounces that tomorrow at 9:30 sharp the market is going to crash.”
“The market is going down because of the presidential job approval”.
“The market is toast because of BREXIT.”
“The market is going to bust because of the stars aligned and it is the Age of the Aquarius.”

The only reliable indicator that I have followed over the years is tracking quarterly GDP numbers. As you know, GDP stands for Gross Domestic Product. And this number really gives us a feel what really is going on in the economy. Positive numbers are good. Negative numbers are bad. Bull markets do not die of old age, but rather of recessions. And recessions are normally cause by negative or long-term weakening of GDP quarterly numbers. 

Check out this chart out below:

 

 

 

 

 

 

 

 

 

[1] https://www.advisorperspectives.com/dshort/updates/2017/09/22/recessionalert-weekly-leading-index-update 

The solid line is a measure of quarterly GDP numbers. The grey area represents recessions. The solid blue line represents the GDP numbers starting to trend down in 1999-2000 and the stock market dropped - BOOM, we were in a recession. Same thing happened in 2007-2008. The GDP numbers started trending down, the market went down, and then we experienced The Great Recession.

This second chart I included below is a little easier to read than the first. It's a diagram that shows quarterly numbers from 2007-2016. As you can see, at the start of 2008, we started experiencing negative GDP numbers – BOOM, a bear market happened and the great recession hit. The quarterly GDP numbers are published- wait for it- quarterly. The last quarter was 3.01%. And according to the Bureau of Economic Analysis, in the last 14 quarters, we have had only one negative quarter.

 

 

 

 

 

 

 

[2]  https://tradingeconomics.com/united-states/gdp-growth-annual

While it might seem more valid to try and link the market movement with the presidential job approval, doomsday talk, and/or the alignment of the starts, I have found that this indicator is much more reliable as well as published. You can find it on the web in multiple places -just type in the words Quarterly US GDP Numbers.

Sincerely,

John Romano, CFP®

References:
1.  https://www.advisorperspectives.com/dshort/updates/2017/09/22/recessionalert-weekly-leading-index-update
2.  https://tradingeconomics.com/united-states/gdp-growth-annual

John Romano, CERTIFIED FINANCIAL PLANNER™, has over 30 years experience in the financial field. John is a Registered Representative with Securities America, Inc. (member of the FINRA and SIPC), and an Investment Advisor Representative with Securities America Advisors. He has prepared hundreds of reports for retirees to assist in their retirement income planning needs. He is dedicated to providing portfolio analysis, dividend and income information, and investment management services to retirees (and those preparing to retire) in The Villages, Florida and surrounding areas. He is a member in good standing of the Financial Planning Association (FPA).

The opinions and forecasts expressed are those of the author, and may not actually come to pass. This information is subject to change at any time, based on market and other conditions and should not be construed as a recommendation of any specific security or investment plan. Past performance does not guarantee future results.

Securities offered through Securities America, Inc. Member FINRA/SIPC, John Romano CFP® Registered Representative. Advisory Services offered through Securities America Advisors, Inc. John Romano Investment Advisor Representative. Romano Income Strategies and Securities America are not affiliated.
Trading instructions sent via e-mail may not be honored. Please contact my office at (352)753-8590 or Securities America, Inc. at (800) 747-6111 for all buy/sell orders. Please be advised that communications regarding trades in your account are for informational purposes only. You should continue to rely on confirmations and statements received from the custodian(s) of your assets. The text of this communication is confidential and use by any person who is not the intended recipient is prohibited. Any person who receives this communication in error is requested to immediately destroy the text of this communication without copying or further dissemination. Your cooperation is appreciated.

305 Skyline Drive, Suite 3, Lady Lake, FL 32159

Phone: 352-753-8590

Email:  John@RomanoJohn.com

Website:  www.RomanoJohn.com


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See “Resources” for Articles, Calculators, Newsletters, and Videos: http://www.romanojohn.com/learning_center/

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     What is the Market cooking ?

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A former professional wrestler called "The Rock" is is on TV, movies, and Netflix. You pretty much can't go anywhere without seeing the personality of “The Rock”.  As a former wrestler, he had built his entire career on jumping up on the rope and getting the crowd psyched up by saying, “Can you smell what The Rock is cooking?” And now The Rock is thinking about running for president!

I will get back to The Rock in a little bit, but let's talk about what is cooking in the market.
Well, it's cooking international cuisine, be it French, German, Asian, Brazilian, or what not. For the first time in many years, the international equity markets are powering past the U.S. markets.  For many years after the Great Recession (2008-2009), the best place for returns and safety was right here at home (USA).  Now, for just the last few months, we're seeing a change of leadership.  Is this a permanent change?  Who knows?  But, it is time to perhaps look at your allocations and make necessary adjustments.  

In the U.S., unemployment is still going down and finally wages are moving up.  I believe through interactions with many young people in their mid 20s, we have the best job market maybe in the last 15 or 20 years.  This is extremely important because as you know, 70% of our GDP is the consumer spending money.  If our next generation of workers is not getting pay raises, that bides poorly for the future economy. 

Disruptive Technology

Disruptive technology is rocking current old time industries. Look at what Uber is doing to transportation, checkout what Amazon is doing to retail shopping. Facebook is decreasing advertising streams for old line communication companies.  Disruptive technologies always come about- It just seems like they come faster today.   

 Perhaps it might be interesting to have a president who goes by the name “The Rock”.  How about “President The Rock”?  To take this a little bit further, our buddy in Russia, Putin...  Every chance he gets, he takes off his shirt to prove he is a macho man.  He might think twice about taking off his shirt, because the only person who takes off his shirt more than Putin is The Rock.  And you may agree with me when I say The Rock seems to have a much better physique than the Putin!

 

Sincerely, John Romano, CFP®

John Romano, CERTIFIED FINANCIAL PLANNER™, has over 30 years experience in the financial field. John is a Registered Representative with Securities America, Inc. (member of the FINRA and SIPC), and an Investment Advisor Representative with Securities America Advisors. He has prepared hundreds of reports for retirees to assist in their retirement income planning needs. He is dedicated to providing portfolio analysis, dividend and income information, and investment management services to retirees (and those preparing to retire) in The Villages, Florida and surrounding areas. He is a member in good standing of the Financial Planning Association (FPA).

Securities offered through Securities America, Inc. Member FINRA/SIPC, John Romano CFP® Registered Representative. Advisory Services offered through Securities America Advisors, Inc. John Romano Investment Advisor Representative. Romano Income Strategies and Securities America are not affiliated.

Trading instructions sent via e-mail may not be honored. Please contact my office at (352)753-8590 or Securities America, Inc. at (800) 747-6111 for all buy/sell orders. Please be advised that communications regarding trades in your account are for informational purposes only. You should continue to rely on confirmations and statements received from the custodian(s) of your assets. The text of this communication is confidential and use by any person who is not the intended recipient is prohibited. Any person who receives this communication in error is requested to immediately destroy the text of this communication without copying or further dissemination. Your cooperation is appreciated.

305 Skyline Drive, Suite 3, Lady Lake, FL 32159

Phone: 352-753-8590

Email: John@RomanoJohn.com

------------------------------------------------------------------------------------------------------------------------------------

View our updated Website http://www.RomanoJohn.com/

See “Resources” for Articles, Calculators, Newsletters, and Videos: http://www.romanojohn.com/learning_center/

See “Market Watch” for Detailed Quotes, Symbol Lookups, or Markets at a Glance: http://www.romanojohn.com/market_watch/

 


     My Favorite Chart

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I have used an updated version of this chart for 20+ years. It represents what a long-term structural market looks like (sometimes called a secular market). I have received many questions about how long this bull market can last, and I always reference this chart to show that structural markets last for a very long time. Let me elaborate a little more on that. When we look at the chart and it says we are in a structural bull market, it doesn't mean that you don't have short term bear markets and/or corrections. Over a longer period of time (structure) the market trends up in a bull market on an average of 14 years and the same goes for a bear market. When I started the business in 1981 a structural bear market had been happening from 1966-1981. Needless to say, many investors were not too excited about U.S. Equities in 1981.

 

 

 

 

 

 

 

 

 

 

 

[1]https://oxlive.dorseywright.com/research/bigwire/2017/05/11/05-11-2017

5  take-aways:

1. The investor who was buying shares at a depressed cost over time from 1966-1981, normally called Dollar Cost Average (DCA) , did extremely well during the 80's and 90's because they had bought so many shares when the share price was depressed.

2. The retired investor during this bear market did very poorly because of the price declines unless they changed strategies.

3. There were other markets to consider investing during this particular bear market; Emerging Markets, Real Estate, High Interest, and Commodities.

4. The key is to know what kind of market you are in and if it is not proven profitable to switch to a different market.

5. As the chart shows, we are in a structural bull market until we are not.

Sincerely,

John Romano, CFP®

References:
 [1]https://oxlive.dorseywright.com/research/bigwire/2017/05/11/05-11-2017
 

John Romano, CERTIFIED FINANCIAL PLANNER™, has over 30 years experience in the financial field. John is a Registered Representative with Securities America, Inc. (member of the FINRA and SIPC), and an Investment Advisor Representative with Securities America Advisors. He has prepared hundreds of reports for retirees to assist in their retirement income planning needs. He is dedicated to providing portfolio analysis, dividend and income information, and investment management services to retirees (and those preparing to retire) in The Villages, Florida and surrounding areas. He is a member in good standing of the Financial Planning Association (FPA).

Past performance does not guarantee future results. An investor cannot invest directly in an Index. Dollar cost averaging involves continuous investment in securities, regardless of the fluctuating price levels. Investors should consider their ability to continue purchases through periods of low price levels or changing economic conditions. Such a plan does not assure a profit and does not protect against loss in declining markets

Securities offered through Securities America, Inc. Member FINRA/SIPC, John Romano CFP® Registered Representative. Advisory Services offered through Securities America Advisors, Inc. John Romano Investment Advisor Representative. Romano Income Strategies and Securities America are not affiliated.

Trading instructions sent via e-mail may not be honored. Please contact my office at (352)753-8590 or Securities America, Inc. at (800) 747-6111 for all buy/sell orders. Please be advised that communications regarding trades in your account are for informational purposes only. You should continue to rely on confirmations and statements received from the custodian(s) of your assets. The text of this communication is confidential and use by any person who is not the intended recipient is prohibited. Any person who receives this communication in error is requested to immediately destroy the text of this communication without copying or further dissemination. Your cooperation is appreciated.

305 Skyline Drive, Suite 3, Lady Lake, FL 32159

Phone: 352-753-8590

Email:  John@RomanoJohn.com

--------------------------------------------------------------------------------------------

View our New Blog at :  http://www.RomanoJohnBlog.com/

View our Website at:     http://www.RomanoJohn.com/

 


     " Houston, all systems go ! "

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Do you remember when America was on the way to the moon? Or perhaps you were too young to have seen some of the Apollo missions/rockets (years 1961 - 1975). Back then, we only had three channels on the television and the whole nation watched the countdown to the major rocket launches (i.e. Apollo Missions). Luckily for me, I grew up in Ormond Beach and did a lot of fishing around there. I saw most of the Apollo moon missions from a fairly close area (within 5 - 6miles) and it's true, that the ground would actually shake during take off! And if it was a night time launch, the whole sky would be lit up as well. It really was an incredible sight to see the Saturn rocket take off!

Some interesting facts about the rocket:

Let me tell you a little about the Saturn V rocket. The rocket stood 363 feet (111 m) tall, and it was 33 feet (10 m) in diameter. It was taller than the Statue of Liberty from the ground to the torch.  Fully fueled, the Saturn V weighed 6.5 million pounds (2,950 metric tons). [1]

As they were getting ready to light up the rocket, they would always radio back to Houston and say, “Houston, all systems go!” Obviously, the conditions had to be perfect for a successful launch; no winds, no lightening, and all systems had to be functioning correctly.

 

Is our economy ready to lift off?  Let's go ahead and check the status on our economic conditions:
 

  • Job Numbers: The job numbers came out in February and it is a great job number report! But most importantly, these are great high-paying quality jobs. Some examples are: construction, mining, and manufacturing. Total nonfarm payroll employment increased by 235,000 in February. Job gains occurred in construction, private educational services, manufacturing, health care, and mining.[2]

  • Home Sales in January 2017: Home sales and home values are up to all-time values. “Existing-home sales stepped out to a fast start in 2017, surpassing a recent cyclical high and increasing in January to the fastest pace in almost a decade, according to the National Association of Realtors®. All major regions except for the Midwest saw sales gains last month.[3]

  • Consumer Spending:Consumer spending increased 2.5 percent in the fourth quarter of 2016 to $12.98 trillion.  The Bureau of Economic Analysis (BEA) reports consumer spending at an annualized rate. That's so it can compare it to economic output, measured by Gross Domestic Product.[4] 

  • Stock Market: The stock market is hitting all-time highs. It creates a wealth effect which people feel the wealthier they get, the more money they can spend on consumer goods.

  • Small businesses optimism: U.S. small-business owners are the most optimistic they have been since July 2007, according to the latest Wells Fargo/Gallup Small Business Index. The overall index is now at 100, up 20 points since November and up 33 points from one year ago. This represents the largest quarterly increase in three years.[5]

  • Demographics: 70% of the American economy is consumers spending their money. And here comes the Millennials! They are the largest group to move through the American Economy since the baby boomers.  
  • Infrastructure and Tax Cuts: Still pending ... I don't know about you, but I think most people are really looking forward to keeping more of what they make!


We may not be there yet, but we may be closer and closer to saying “Houston, all systems go!”


Sincerely,

John Romano, CFP®
 

References:
[1] https://en.wikipedia.org/wiki/Saturn_V 
[2] http://goldrushcam.com/sierrasuntimes/index.php/news/local-news/9211-united-states-payroll-employment-rises-by-235-000-in-february-2017-unemployment-rate-changes-little-at-4-7-labor-force-participation-rate-at-63-0-percent
[3]https://www.nar.realtor/news-releases/2017/02/existing-home-sales-jump-in-january
[4]https://www.thebalance.com/consumer-spending-trends-and-current-statistics-3305916
[5]http://www.gallup.com/poll/205898/optimism-among-small-business-owners-soars.aspx

John Romano, CERTIFIED FINANCIAL PLANNER™, has over 30 years experience in the financial field. John is a Registered Representative with Securities America, Inc. (member of the FINRA and SIPC), and an Investment Advisor Representative with Securities America Advisors. He has prepared hundreds of reports for retirees to assist in their retirement income planning needs. He is dedicated to providing portfolio analysis, dividend and income information, and investment management services to retirees (and those preparing to retire) in The Villages, Florida and surrounding areas. He is a member in good standing of the Financial Planning Association (FPA).

Securities offered through Securities America, Inc. Member FINRA/SIPC, John Romano CFP® Registered Representative. Advisory Services offered through Securities America Advisors, Inc. John Romano Investment Advisor Representative. Romano Income Strategies and Securities America are not affiliated.

Trading instructions sent via e-mail may not be honored. Please contact my office at (352)753-8590 or Securities America, Inc. at (800) 747-6111 for all buy/sell orders. Please be advised that communications regarding trades in your account are for informational purposes only. You should continue to rely on confirmations and statements received from the custodian(s) of your assets. The text of this communication is confidential and use by any person who is not the intended recipient is prohibited. Any person who receives this communication in error is requested to immediately destroy the text of this communication without copying or further dissemination. Your cooperation is appreciated.

305 Skyline Drive, Suite 3, Lady Lake, FL 32159

Phone: 352-753-8590

Email:  John@RomanoJohn.com

--------------------------------------------------------------------------------------------

View our updated Website http://www.RomanoJohn.com/

See “Resources” for Articles, Calculators, Newsletters, and Videos: http://www.romanojohn.com/learning_center/

See “Market Watch” for Detailed Quotes, Symbol Lookups, or Markets at a Glance: http://www.romanojohn.com/market_watch/

 


         One Chart that Explains it All 

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It's all about growth in the economy, or lack of.  Take a look below at the wonderful chart done by Oppenheimer that shows GDP (gross domestic product) since 1966[1].  It presents an average of about 3% GDP growth.  Well, in the last eight or nine years it has been subpar. 

 

 

 

 

 

 

Source: https://www.oppenheimerfunds.com/investors/doc/2017_Outlook_The_Cycle_Continues_But_the_Risks_Are_Rising.pdf

Many of our newsletter readers grew up and indeed have participated in 3% GDP growth since 1980.  The fact is it was for most of their adult working life.  Now if you fast forward to today, you won't find a millennial (somebody between the ages of 22 and 35) who has even seen what a good economy looks like.  This is the biggest block of people living today and they have not seen one year of 3% GDP.

GDP growth is composed of 70% consumer spending, 18% government spending, and 11% exports. I believe the new policies coming down from Washington like the Keystone Pipeline, Infrastructure building, rolling back regulations, cutting taxes, and increasing military spending are all designed to help GDP get to escape velocity. It is also imperative that the millennial generation starts to participating and believing in the American dream.

For equity investors it is all about the economy. If GDP gets up to 3%, then consumer spending goes up, businesses expand to meet demand and there is hiring more people to build more plants; this triggers more confidence. The cycle will feed on itself !


Sincerely,
John Romano, CFP®

 [1]  https://www.oppenheimerfunds.com/investors/doc/2017_Outlook_The_Cycle_Continues_But_the_Risks_Are_Rising.pdf

John Romano, CFP® has over 30 years experience in the financial field. John is a Registered Representative with Securities America, Inc. (member of the FINRA and SIPC), and an Investment Advisor Representative with Securities America Advisors. He has prepared hundreds of reports for retirees to assist in their retirement income planning needs. He is dedicated to providing portfolio analysis, dividend and income information, and investment management services to retirees (and those preparing to retire) in The Villages, Florida and surrounding areas. He is a member in good standing of the Financial Planning Association (FPA).

Securities offered through Securities America, Inc. Member FINRA/SIPC, John Romano CFP® Registered Representative.  Advisory Services offered through Securities America Advisors, Inc. John Romano Investment Advisor Representative.  Romano Income Strategies and Securities America are not affiliated.

Trading instructions sent via e-mail may not be honored.  Please contact my office at (352)753-8590 or Securities America, Inc. at (800) 747-6111 for all buy/sell orders.  Please be advised that communications regarding trades in your account are for informational purposes only.  You should continue to rely on confirmations and statements received from the custodian(s) of your assets.  The text of this communication is confidential and use by any person who is not the intended recipient is prohibited.  Any person who receives this communication in error is requested to immediately destroy the text of this communication without copying or further dissemination.  Your cooperation is appreciated.
                                                                                                                       
                                 305 Skyline Drive, Suite 3, Lady Lake, FL  32159
                          Phone: 352-753-8590           Email: 
  John@RomanoJohn.com

 

View our updated Website   http://www.RomanoJohn.com/

 

See “Resources” for Articles, Calculators, Newsletters, and Videos:   http://www.romanojohn.com/learning_center/
 

See “Market Watch” for Detailed Quotes, Symbol Lookups, or Markets at a Glance:   http://www.romanojohn.com/market_watch/

 


Is It  Morning in America ?

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My son Nick is in a one-year countdown to exiting college and going into the job market fulltime.  He recently asked me if the election results could affect future employment opportunities.  I said, “Nick, don't focus on politics. Instead focus on the economy.” I will never forget advice given to me by my father.  Every election he would always say, “Always vote your pocketbook.”

 I have been studying the tax proposals, regulations drawdown, and infrastructure plans. It reminds me what I saw happen after the election of Ronald Reagan - It was Morning in America.

The Malaise Economy

In the late 1970s, economists described the economy as the Malaise Economy [1] (sounds like some kind of disease you get in the tropics); No GDP growth for the entire decade, stagnation of wages, inflation, and oil costs had tripled. Do you remember the gas lines? And then along came a new president, Ronald Reagan, who said, “…government is not the solution to our problem; government is the problem  [2]"

Boom
President Reagan cut taxes, rolled back regulations, the economy jumped up to three to four percent GDP.  Businesses expanded, wages went up, and people spent more money.  America was awakened and the stock market cranked.  Reagan had created the right environment and President Clinton kept the good times rolling. 

 Rocket Fuel for the Economy
The demographics were perfect it came in the form of the baby boomers, “Data from the U.S. census Bureau show that there are 76.4 million baby boomers.” [3] They were just hitting their strides in the workforce in the 80's and 90's.  They made money and spent money like there was no tomorrow.  About 70% of our GDP is our own consumption.  The right economic conditions were present and the demographics were in our favor. America had rocket fuel for the economy.  

Houston, We Have a Problem

Unfortunately, fast forward to 2016:

• Taxes are up
• Regulations are strangling businesses
• Subpar GDP growth under 2% for nine years
• Flat wages
• Government has gotten huge and inserted itself into our healthcare system (16% of GDP)
• Health premiums have doubled in the last eight or nine years
• The government could not even create a Healthcare website for a 2-3 billion cost. One of your grandkids could have probably done a better job with GoDaddy.com. 
• Enacted Dodd-Frank to strengthen the big banks (too big to fail). And instead, put out of business hundreds of community banks while the big banks got bigger. [4]
• Sixty percent of American families don't have $1,000 set aside for an emergency.

Is it Morning in America 2 
Studying the pending tax cut regulations proposed; these look like a go to me.  I mean, who is really going to argue with paying fewer taxes?  Cut the corporate tax and bring home the trillions of dollars of cash offshore.  The infrastructure proposal looks good to me instead of a huge stimulus package companies will be offered tax credits to build bridges, airports and roads. 

Rocket fuel for the Economy 2
Here come the millenniums, estimated at 86 million. And guess what?  They want a piece of the American dream just like their parents!  They are starting to hit their peak earning years.  So, let's get America moving again and get GDP up to 3%.  I tell my kids, “Walk faster and dream bigger.” It can also be a lot more enjoyable swimming with the tide than against it.  Please do not pass the Malaise; I've had enough of that!

Sincerely,

John Romano, CFP®

References:
[1]  https://en.wikipedia.org/wiki/Malaise
[2]  http://www.deseretnews.com/top/103/6/Government-is-the-problem-Ronald-Reagans-10-best-quotes.html

[3]  http://www.prb.org/publications/articles/2002/justhowmanybabyboomersarethere.aspx   (April2014)
[4]  http://www.chicagotribune.com/business/ct-rubio-dodd-frank-0807-biz-20150807-story.html

John Romano, CFP® has over 30 years experience in the financial field. John is a Registered Representative with Securities America, Inc. (member of the FINRA and SIPC), and an Investment Advisor Representative with Securities America Advisors. He has prepared hundreds of reports for retirees to assist in their retirement income planning needs. He is dedicated to providing portfolio analysis, dividend and income information, and investment management services to retirees (and those preparing to retire) in The Villages, Florida and surrounding areas. He is a member in good standing of the Financial Planning Association (FPA).

Dividend yield investing may not be suitable for all investors. You should never invest solely on the basis of dividends. Higher dividends are not indicative of the quality of an investment. Additionally, higher dividends will result in lower retained earnings. As dividend yields may not be sustainable, income investors must be sure to analyze an investment carefully and their ability to sustain market fluctuations. Investments paying dividends do not carry lower risk. Dividend payments are not guaranteed by the issuing entity. The issuer can discontinue the dividend at any time. Dividend payments reduce the price of the security by the amount of the paid dividend.

The opinions and forecasts expressed are those of the author, and may not actually come to pass.  This information is subject to change at anytime based on market and other conditions and should not be construed as investment advice or a recommendation of any specific security.  Past performance does not guaranteed future results.
Securities offered through Securities America, Inc. Member FINRA/SIPC, John Romano CFP® Registered Representative.  Advisory Services offered through Securities America Advisors, Inc. John Romano Investment Advisor Representative.  Romano Income Strategies and Securities America are not affiliated.

Trading instructions sent via e-mail may not be honored.  Please contact my office at (352)753-8590 or Securities America, Inc. at (800) 747-6111 for all buy/sell orders.  Please be advised that communications regarding trades in your account are for informational purposes only.  You should continue to rely on confirmations and statements received from the custodian(s) of your assets.  The text of this communication is confidential and use by any person who is not the intended recipient is prohibited.  Any person who receives this communication in error is requested to immediately destroy the text of this communication without copying or further dissemination.  Your cooperation is appreciated.
                                                                                                                       
305 Skyline Drive, Suite 3, Lady Lake, FL  32159

Phone: 352-753-8590

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Bull Markets Don't Die of Old Age ... Recession

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Bull Markets Don't Die of Old Age, They Are Killed by Recessions

I have been asked numerous times how long do bull markets last?  Perhaps a pundit has been on television describing the reason why the market cannot go up, because the market is past the normal bull market cycle.  

Bull markets don't die of old age, they are killed by recessions.  When a country goes into a recession, GDP (gross domestic product) drops.  The demand for cars, iPhones, homes, oil, almost any capital expenditure drops.  About the only thing that doesn't drop is toilet paper, beer, cigarettes, and food.  Layoffs and unemployment goes up.  People's income drops so demand drops.  

The technical definition of a recession is two successive quarters of negative GDP.  As you remember, our last one was in the latter part of 2008 and in the first six months of 2009.  Let's go ahead and look at some charts. In the first chart is an indicator that I follow, and I believe a picture really is worth a thousand words :

 

 

 

 

 

 

 

http://www.advisorperspectives.com/dshort/updates/ECRI-Weekly-Leading-Index [1]

It's called a recession alert, and there are two different lines. One is a red line (ECRI weekly leading index growth), and the other is a blue line (Recession alert weekly leading index). They are both very similar, but let's focus on the blue line.  When the blue line is going down, that means the chance of recession is going up, and when the blue line is going up, the chances of recession are going down. 

If you look at the last quarter of 2015 and the first quarter or two 2016, you could see the blue line was going down which signaled a weakening economy. Fortunately for us, if you look at the blue line now, you can see that line has been trending up for a number of months. 

In my experience, the stock market is like a canary in the coal mine.  It will normally start signifying a potential recession months away by trending down.  If GDP does go negative, the market will even go down even further. 
The second chart is a GDPNow model, a forecasting model that is done by the Atlanta Federal Reserve Bank.  Just Google it, or just see it here:   

 

 

 

 

 

 


https://www.frbatlanta.org/cqer/research/gdpnow/?panel=1  [2]

This GDPNow model uses real-time data instead of using old data from three to six months ago. It is updated on a weekly basis and as of  8-16-16 is forecasting strong third quarter GDP.

Sincerely,

John Romano, CFP®

[1]   http://www.advisorperspectives.com/dshort/updates/ECRI-Weekly-Leading-Index
[2]   https://www.frbatlanta.org/cqer/research/gdpnow/?panel=1                       

The opinions and forecasts expressed are those of the author, and may not actually come to pass. This information is subject to change at anytime based on market and other conditions and should not be construed as investment advice or a recommendation of any specific security.  Past performance does not guaranteed future results.
Securities offered through Securities America, Inc. Member FINRA/SIPC, John Romano CFP® Registered Representative.  Advisory Services offered through Securities America Advisors, Inc. John Romano Investment Advisor Representative.  Romano Income Strategies and Securities America are not affiliated.
Trading instructions sent via e-mail may not be honored.  Please contact my office at (352)753-8590 or Securities America, Inc. at (800) 747-6111 for all buy/sell orders.  Please be advised that communications regarding trades in your account are for informational purposes only.  You should continue to rely on confirmations and statements received from the custodian(s) of your assets.  The text of this communication is confidential and use by any person who is not the intended recipient is prohibited.  Any person who receives this communication in error is requested to immediately destroy the text of this communication without copying or further dissemination.  Your cooperation is appreciated.

John Romano, CFP®
305 Skyline Drive, Suite 3, Lady Lake, FL  32159
Phone: 352-753-8590  
           

Email:   John@RomanoJohn.com

View our updated Website   http://www.RomanoJohn.com/

 

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