#1 Save More

#2 Spend Less

#3 Increase Income

#4 Invest Always

#5 Do Not Lose Money

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What Really Drives Asset Price Appreciation?

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When it comes to investing over the long run, I’ve found that by taking a broad view and drilling downward can bring the investment mosaic nicely into focus. #DigitalAdvisor

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Real Returns Are Most Important

What’s the stock market, economy, society, and future all about? It is universally about “people.” The renowned fund manager, Peter Lynch, espoused investing in companies producing goods and services that an individual purchases for themselves. I’ve observed, those investing capital and keeping their pulse on human needs, wants, and activities, over the long-term are rewarded accordingly.

When considering people, their existence and well-being, are what’s most important. A better life is measured by contentment with one’s standard-of-living. When it comes to investing money, the objective is to maintain and sustain our present living standards. It is necessary to make sound investments, diversify sufficiently, and not to lose money.

Secondly, inflation has averaged about three percent over the past 100 years, it is closer to two-percent at present. Inflation increases costs of food, shelter, energy, healthcare, and many of the products and services humans need for existence. For people to live the life they desire socially and financially, it is important to have investments that historically have outperformed the adverse effects of inflation. The chart below shows the S&P 500 after-inflation returns yearly since the end of World War II.

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Job’s Report Reversal or not?

You decide! Today’s jobs announcement as reported by the Establishment Survey (CES) suggests a stark slowdown in new hiring compared to the average trend. Conversely, the Household Survey (CPS) seems to argue a continuum of the job growth story. Unquestionably, the overall employment expansion was stymied from the Government Shutdown. Also, I suspect C-Suite decision makers were digesting the aftershocks of the stock market’s Q4 market descent of nearly 20% and chose to tighten up on the growth reins until sentiment normalized.

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Retail sales declined significantly in December. Is recession looming?

Retail sales fell -1.2% last month, the worst December of the economic expansion, online sales declined by -3.9%. CNBC, MarketWatch, Reuters, WSJ, NYT, and forecasters inferred and inked grim warnings about the contraction in consumer spending. I decided to take a closer look. Historically, when there’s palpable fear in the air, consumers tighten their belts. For example, during the great recession, when all news was shock and all, the personal savings rate doubled. Yes, it doubled from 3% to 6%. So, considering the -5.8% stock market decline in December, is it any wonder that consumers began monitoring their spending?

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Are Stocks Overvalued?

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#PositiveNews Initial unemployment claims fell to 199,000, or 0.06% of the total U.S population.

#PositiveNews Initial unemployment claims fell to 199,000, or 0.06% of the total U.S population. This is the lowest percentage of people applying for unemployment insurance in the report’s 52-year history. Simply, more Americans are working hard versus hardly working.

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Forward P/E ratios and subsequent 10-year returns

#Investors — Here is an interesting scatter plot chart posted on Daily Shot. They say a picture is worth a 1000 words or dollars, that certainly is the case in this graph, issued by JP Morgan.

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19% in ’19, Is the ’09 Bull Run Done?

“Is the 2009 Bull Run Done?”…/19-in-19-is-the-09-bull-run-done

History of the ’09 Bull Market

The secular bull market officially began on March 9, 2009, at 676.53 for the Standard & Poor’s 500 (SP500), the low point close of the horrendous ’08-’09 Great Recession. The stock market suffered its worst bear market since the 1930s; after peaking at 1,565.15 on October 9, 2007, the SP500 shed 888 points, erasing 56.7% of its value in 517 days. At the turn of the millennium, the index stood at 1,469.25; nearly a decade later, the index price was 54% lower. Owning stocks proved to be a costly and very painful exercise for investors during this period. Tuesday, March 10, 2009, the tide turned with the index increasing 6% on the trading session. The index rose 27% over the next 30 days and closed 66.8% higher at year’s end. Stock prices were stabilized and lifted by aggressive monetary policy. The Federal Reserve implemented ZIRP (zero interest rates) and Quantitative Easing in QE 1, 2, and 3, which entailed large scale asset purchases of treasuries and mortgage-backed securities, to fend off deflation and further asset price reduction.

In reflection, it has been a heck of ride lasting 9 years and 5 months, if, September 20th’s 2,930.75 closing all-time high (ATH) ends up being the top. This long-term bull has set 211 ATHs along its charge and increased in value from $6.9 trillion to $26.1 trillion. As of this writing, the present correction has erased $4.3 trillion of those gains. There have been 2,402 trading sessions throughout, 1,324 up days and 1,078 down. Positive and negative days averaged .48% and -.41%, respectively. Thursdays proved to be the most profitable day of the week to be invested, netting .089% per trading day, with Fridays bringing up the rear at .034%.

Since 1928, the month of July has rewarded broad market participants an average of 1.3%, and continued its generous manner garnering shareholders a whopping 2.8% average gain all through the ’09 bull advance; March and April, likewise, have mirrored their historical results. January, normally a positive month for stocks over the past 90 years, has been undesirable during the ’09 bull.

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