Low Fees and Diversification Do Not Protect from Major Loss

We believe traditional wealth management services are often expensive for the service provided. Historically, wealth managers have invested client money in a diversified portfolio of stocks and bonds using a buy-and-hold approach. Apart from periodic rebalancing and an occasional position change, client portfolios are held through bull and bear market cycles….Delta Wealth Adviser20170421

Housing IS the Business Cycle

The above is a quote from UCLA economist Ed Leamer. He wrote a paper in 2007 claiming “residential investment offers by far the best early warning sign of an oncoming recession.” Shown below is a chart of the cumulative abnormal contribution to GDP growth by residential investment and recessions.Delta Wealth Adviser20170413

Hallelujah, Reflation!

A few years ago, we were asked by concerned clients if the U.S. was slipping into a deflationary cycle somewhat like what Japan has experienced for the past 28 years. Like Japan, we have aging demographics, a mature economy and our government is overburdened by debt. The Japanese example is disconcerting as the Nikkei 225[…]

Small Cap Divergence

The S&P 500 Index, which is heavily weighted to 20 very large capitalization stocks, and the Dow Jones Industrial Average (30 mega cap stocks) are not far from their March 1st all-time highs following Trump’s calming speech to Congress.  The Russell 2000 Small Cap Index (IWM) has lost momentum and has drifted sideways to down[…]

Velocity Pivot Good for Stocks

During the greatest bull market in history from 1987- 2000 when the S&P 500 gained 582%, the Velocity of Money increased steadily (arrow 1 below).  Increasing velocity has coincided with most expansionary periods. Not the case in this bull market.  Since 2010, the velocity of money has fallen unceasingly (arrow 2 below) and is resting[…]

How Safe Are the Banks?

A stable banking sector willing to lend is critical to the growth of the U.S. economy. The near failure of many of the largest banks in the U.S. in 2008 brought the economy to the brink of depression. Since the presidential election last November, the S&P 500 financial sector ETF (XLF) is 24% and the[…]

Climbing Wall of Worry

One of the great adages of the investment business is that bull markets climb a wall of worry. “How can the stock market be hitting new highs when so much is wrong in the world?” “Isn’t the market riskier now after a nearly 8-year bull run?” “Aren’t we in the 8th or 9th inning of this[…]