investing

  • Happy New Year and Hello 2018!

    In terms of investment performance it is almost sad to say goodbye to 2017.  Global politics, tragedies and dramas aside, it was an unusually great year for stock market investors. The global economy had just the right ingredients to make for stellar stock market returns – a global economic and profit cycle recovery, coupled with historically low interest rates, and a large crowd of underinvested institutional and individual investors. Historically, this rare combination delivers above average stock price performance and 2017 did not disappoint! It was a particularly good year for global investors as foreign markets outperformed US indexes.  However, can we expect more of the same for 2018?

    Though we would welcome a repeat of ‘17 in ’18, we find it highly doubtful based on my research and historical precedent. As we discussed one year ago, the first year of a global economic recovery and profit cycle can produce tremendous stock price performance and we would suggest most of that is now behind us. Many of the data points that sent stock prices soaring over the past 18 months – namely better economic and corporate profit growth – were a surprise to most investors.  This coupled with a large crowd of underinvested institutions and individuals caused a huge appetite for stock purchases and this tremendous demand for stock itself is the primary reason for the “way better than average” return of stocks.  At this point the element of significant positive surprises on the economic and profit fronts are quite slim and most of the underinvested have put their funds to work.  Does that mean that the party is over for stock market returns?  No way.  The party is just likely to be more subdued, and much better than the bond market could muster in terms of return.

    I have suggested that we have been at the beginning stages of a new business cycle and bull market for over a year now, and that the bull market of 2009-15 died with the 20 percent decline in equities during ‘15-‘16.  This was not and is still not conventional wisdom.  As I follow my theory, I see no reason why the current economic, profit cycle and bull market cannot continue for a number of years.  Unlike the media and many other investors today, I believe that the stock market is reasonably priced and that economic growth and corporate profits will continue to expand, supporting even higher stock prices as we move forward.  However, the stock price trajectory of 2017 will most likely shift down a few notches in 2018 to a level more in tune with profit growth in the 8-12% range, still far superior to just about any other liquid investment!  In terms of volatility 2017 exhibited one of the least volatile years in history with no corrections of 3% or more!  Investors would be wise to expect normal volatility (8-10% corrections) to return in 2018 as both foreign and domestic stocks churn higher. It should be a good and more normal year for stock investors.

    As you may be aware Janet Yellen, the Federal Reserve chair, raised interest rates four times in the past 12 months and she and her replacement Jerome Powell will likely continue this policy to normalize interest rates.  Expect two to three rate hikes in 2018 assuming the economy and profit growth stay on course.  These rate hikes pose risks to bond mutual fund and bond Exchange Traded Funds – areas that I always avoid.  A significant rise in rates could cause these bond funds to fall in value and create massive selling and significant volatility in these instruments.  That risk (which we are not subject to) aside, a higher interest rate environment is welcome to those of us that buy individual bonds and can lock in these higher yields.  Hopefully, a healthy economy will bring attractive bond yields to your portfolio in the coming year.

    Here’s to a Happy New Year! Time to take command of your wealth. My book can help.

    Purchase the Paperback for only $14.95 Today on Amazon.

    No matter your level of experience, The Journey to Wealth teaches you to invest using a clear, easy-to-follow sequence of concepts. In a four-step process, you will learn how to identify your lifestyle goals for building immediate and long-term wealth, as well as how to invest according to your risk tolerance and needs. Straight-forward detailed explanations, charts and graphs, inspiring citations about wealth creation, and artwork will keep you reading, learning, and creating a SMART investment plan for your future.

     

  • Investing Just Got A Little Easier

    Today I am pleased to announce the launch of a paperback version of my award-winning book, The Journey To Wealth, which is now available on Amazon and priced at 63% less than the hardcover edition.

    The old rules of investing simply no longer work. In today’s uncertain times it’s no wonder that nearly 80% of Americans do not invest. Yet people at all income levels can transform their lives with a basic understanding of financial markets and a solid, stress-free investment strategy. 

    The Journey To Wealth distills the jargon of financial markets and equips readers with the tools they need to achieve financial independence. It is my hope that this new edition will be more accessible to the millions of Americans who are not currently investing but would like to start. It is far better to have a prosperous society than a struggling one, which is why I am passionate about this opportunity to share my tried and tested strategies with a wider audience.

    Success as an investor in today’s financial markets often requires going against much of Wall Street’s so-called “wisdom.” My book helps readers develop a personalized wealth plan tailored to their particular lifestyle, goals, and family circumstances. Too many investors fall prey to the same catastrophic mistakes. Such pitfalls can easily be avoided with my SMART investing philosophy, which includes:

    • Knowing about different types of investment instruments and understanding their pros and cons
    • Understanding the history of financial markets
    • Recognizing and taking advantage of market patterns and cycles
    • Learning how to maximize returns while managing risks

    In short, my book demystifies the process of investing and empowers readers to make wise investment decisions. Anyone can discover that investing the right way will help you achieve financial freedom. Here’s to your financial future!

    The Journey to Wealth strikes a winning combination: authoritative information written by a polished professional presented in a highly digestible, extremely attractive, high-quality package. — Barry Silverstein, Foreword Reviews

    Winner of The 2017 Indie Excellence Book Award. Winner of the 2017 Beverly Hills Book Award.

    Finalist in the 2017 Best Book Awards. Honorable Mention in the 2017 New York Festival of Books.

     

    Purchase Your Copy for only $14.95 Today on Amazon.

    No matter your level of experience, The Journey to Wealth teaches you to invest using a clear, easy-to-follow sequence of concepts. In a four-step process, you will learn how to identify your lifestyle goals for building immediate and long-term wealth, as well as how to invest according to your risk tolerance and needs. Straight-forward detailed explanations, charts and graphs, inspiring citations about wealth creation, and artwork will keep you reading, learning, and creating a SMART investment plan for your future.

     

     

  • The Reviews Are In…

    The Journey To Wealth has been blessed in that last month with wonderful reviews that I’ve listed below. I hope they will inspire you to pick up a copy and start your own journey to financial freedom. The Black & White version is available for only $14.95 on Amazon.

    *****

    There are many books that flood the investing category annually; simply differentiating a title is a major challenge. The Journey to Wealth strikes a winning combination: authoritative information written by a polished professional presented in a highly digestible, extremely attractive, high-quality package. This in itself makes The Journey to Wealth worthy of consideration as a guide to wise investing. –Barry Silverstein, Foreword Reviews

    *****

    From preferred stocks and the value and limitations of bonds to diversification processes, there is no better book on the market suitable not just for explaining investment processes, but for understanding the psychology of creating and sticking to a flexible strategy that works not by formula, but by concrete knowledge and market analytics. Sound complex? Not under James E. Demmert’s hand: he makes The Journey to Wealth accessible to a wide audience, from savvy investors to novices alike, and gives it a straightforward, jargon-free treatment that makes it an informative pleasure to read. — Diane Donovan, Midwest Book Review

    *****

    [A] methodical and well-organized narrative… Throughout this detailed and instructive book, Demmert crystallizes his advice into 18 principles, clearly set off in boxes for easy reference…. the narrative is generally remarkably compelling… perfect for those seeking a more in-depth understanding of global financial forces and practical investment choices and strategies. — Kirkus Review

    *****

    In an investment world loaded with so many intervening variables, The Journey to Wealth is a breath of clean, fresh air. It helps the individual investor develop a long term plan for building a nest egg. Just as important, it shows you how to protect that investment during the inevitable short term troughs that occur while riding the rising wave of wealth called the Stock Market. It is a must read for every investor! — Amazon Reviewer

    *****

    An easy read, this book is perfect for people, like me, with no finance background. I now understand how money works and what’s required to reach our goals. It’s so good, I even recommended it to both of our young-adult sons. — Amazon Reviewer

    Thank you for reading the reviews. Visit me on Facebook or LinkedIn if you would like to follow along with my posts.

    Purchase Your Copy Today on Amazon.

    No matter your level of experience, The Journey to Wealth teaches you to invest using a clear, easy-to-follow sequence of concepts. In a four-step process, you will learn how to identify your lifestyle goals for building immediate and long-term wealth, as well as how to invest according to your risk tolerance and needs. Straight-forward detailed explanations, charts and graphs, inspiring citations about wealth creation, and artwork will keep you reading, learning, and creating a SMART investment plan for your future.

     

  • Happy First Anniversary To The “Unloved” Bull Market & Global Earnings Recovery

     About one year ago stock prices began their ascent from the 15 month “funk” that began in the summer of 2015. As you may recall, China’s growth slowed during that time and global corporate profits took a tumble sending global stock indexes down nearly 20% in the summer, and once again into the first quarter of 2016. It was the first time since 2008 that stock indexes were negative for more than a year, once again testing investor’s patience.
    However, since last summer, I have witnessed a powerful rally in global stock prices that rivals some of history’s best one year advances, all in the face of above average doubt and general nonacceptance from the average investor, the media and many institutional investors. Why is this market recovery so untrusted and unloved?

    I can understand why most investors questioned the viability of rising stock prices last year, given that it coincided with the surprising (to most) election of Mr. Trump. The initial rise in stock prices, referred to last fall as the “Trump Bump,” has seemed to take on a life of its own despite Trump’s inability to get anything done on Capitol Hill. Today’s doubters are understandably under invested and paying dearly for it. Years like these don’t come often. If history is a guide these doubters will eventually capitulate and embrace the steady rise in stock prices for one main reason: the recovering business cycle and increasing corporate profits support higher stock prices.

    Though the earnings recession and market decline of 2015-16 was unusually mild, it did constitute a bear market and recession in our book. This very well may be another point of confusion for the average “doubting” investor who thinks that this bull market started in 2009 and is the longest bull market in history.  The doubters need to recognize that the prior bull market ended at the 2016 low and we are at the beginning of a new business cycle and not the end of an aging one. One can simply look at the impressive and broad recovery in earnings growth across all economically sensitive sectors and almost all regions of the globe – it’s the real deal and it’s a great time for you to be a global investor.

    Lastly, I would like to point out that although Dow 22,000 sounds high, it is not overpriced relative to earnings. Moreover, foreign markets are even less expensive relative to earnings. As global corporate profits continue to advance, markets will support even higher stock prices and a higher Dow Jones Index than one might imagine. Of course, as markets continue upward the doubters will, over time, become more fully invested – which in turn will drive stock prices higher. Nothing lasts forever, but we would suggest that we are at the early stages of better times to come. The first year of business cycle recoveries typically result in big stock market gains (just like this one) and in subsequent years returns normalize in the 8-12% range, hence the importance of being involved early.

    Though I am optimistic, I do expect the normal 8-10% corrections along the way upward. Investors haven’t seen one of those in over a year and should prepare themselves for the likelihood of a return to more normal volatility. Additionally, I want you to know that within my optimistic view, I am very aware that we are dealing with the unknown and that it is a risky world. Therefore, I suggest to continue to employ my Active Risk Management tools such as having a flexible approach to your portfolio’s asset allocation, sector management and the careful placement of stop loss orders on the economically sensitive areas of your stock portfolio.  All of which can be found in my book.

    I hope you find this update helpful.

    No matter your level of experience, The Journey to Wealth teaches you to invest using a clear, easy-to-follow sequence of concepts. In a four-step process, you will learn how to identify your lifestyle goals for building immediate and long-term wealth, as well as how to invest according to your risk tolerance and needs. Straight-forward detailed explanations, charts and graphs, inspiring citations about wealth creation, and artwork will keep you reading, learning, and creating a SMART investment plan for your future

    Purchase Your Copy Today on Amazon.

  • Markets Don’t Go Up Forever

    I hope you are enjoying the profitability that stock ownership can provide as global stock indexes continue to reach new highs. Year-to-date most indexes have reached double digit returns, with global indexes providing the most upside.

    I believe that the last bear market occurred in 2015-16 when global indexes fell 20% and corporate profits experienced a very mild recession. Over the past year we have been witness to a significant global corporate profit and business cycle recovery. Though many have called this a “Trump Bump,” it should be obvious at this point that the improving global economy and corporate profits cycle has little to do with the US President and more to do with how the business cycle works. The best part of our message today is that we believe that this new bull market has a brighter and longer future than most investors believe.

    Corporate profit cycles last years – not months – and this one is in its infancy. Though many investors are in awe that the Dow Jones Industrial Average is over 22,000, they should try to remember that it is simply a number – it was 800 when I started my career! What is more important is the price of the market related to its underlying profitability or “price-to-earnings ratio.” In statistical terms the market is nowhere near overvalued. In fact, there are sectors of the market that still trade at ridiculously inexpensive multiples to earnings – not at all a symptom of a market that is overvalued.

    There are many investors who question the future longevity of this market strength – which is another indication that we are far from a market top. However, there is a much larger crowd who seem immune to the old adage, “what goes up must (at some point) come down.” Though we believe that the recent market strength is well justified and has “legs,” we would not advise investing without some tools to manage the risk of this thesis being wrong and to protect your portfolio from catastrophic loss. As you know, we employ our Active Risk Management process specifically for this reason – this includes actively managing your asset allocation, your sector exposure and the careful placement of stop loss orders – the combination of which we call our “plan B.”

    I find it hard to believe that today’s investors would invest aggressively without some sort of “plan B” should it all come to a crashing halt. Surely investors must recall the recessions and corresponding stock market declines of 35-55% that have occurred several times in the past two decades?  Or the time it took for stocks to recoup those losses – on average six to seven years?  I find the short term memory of the average investor just plain astonishing. However, with the media’s attention on passive/robo/index investing, perhaps we can’t blame these naïve investors for getting sucked in! Let’s face it – while markets are going up the tide lifts all ships and your average index fund will participate in market returns. However this view is extremely shortsighted, particularly when it comes to the bulk of an investor’s wealth as they approach important timelines, such as retirement. They say that stock market history is riddled with investors repeating the same mistakes. The lack of some sort of “plan B” risk management appears to be the most obvious.

    The increasing popularity of passive/robo/index investing should be a warning to all investors to employ risk management tools and a plan for avoiding catastrophic loss, for the next inevitable and eventual market decline may just be much bigger than expected. In the meantime, continue to invest with an eye towards growth and be well prepared should things go awry. My book can help.

    No matter your level of experience, The Journey to Wealth teaches you to invest using a clear, easy-to-follow sequence of concepts. In a four-step process, you will learn how to identify your lifestyle goals for building immediate and long-term wealth, as well as how to invest according to your risk tolerance and needs. Straight-forward detailed explanations, charts and graphs, inspiring citations about wealth creation, and artwork will keep you reading, learning, and creating a SMART investment plan for your future

    Purchase Your Copy Today on Amazon.