Money Matters update April 23, 2017 READ

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More on the markets and the world around us.....

Sometimes investing ideas have to be searched out in far away lands.

Hi kids,

A day in the sun! Back from a Latin American jaunt which took place for business and pleasure. Emerging markets, developed regions, the US companies or the bond pits. Where is the next big thing and where do we look to be ahead of the pack? It is said buy when everyone is selling and sell when everyone is buying. Looking back on your past experiences, does this bring up any regrets or thoughts on your past behavior?

Indeed the trip was amazing and the strange sights and sounds I saw captured my imagination causing moments of awe and wonder. The food, culture, language and people were are different than here at home and in its difference lies the discovery. For if all things were the same everywhere, what a grey world it would be indeed. The same thing goes for investing. We first have to realize not everyone can win at the same time which is to say for someone to make money, someone has to likely lose it. Not a settling thought to be sure. Not so bad if one is on the making end of the deal right? However time spent on the losing end can initiate quite the sting to say the least. Everyone has lost money at one time or another, whether it be dropping your wallet somewhere or losing money on a stock or investment. It is not a pleasant feeling to be sure.What we can say is if everyone is thinking the same thing, no one is thinking. Which is also a way of saying be careful when everyone is buying or everyone is selling. Think back to the housing boom. How many people were buying? A lot! How many were rushing to sell? A few (smart ones).

Main stream investing takes a TV or newspaper some might argue. I am not one of them. Others might say look under the rocks and in the garbage bins for babies thrown out with bath water or hidden undiscovered treasures. This is one place I tread for our clients. This trip was the latter. Emerging markets can be more risky than domestic ones meaning they may move faster. Such is not always the case of course but do your own research to see of what I speak. As for now, I think opportunity abounds in the midst of great risk. This may sound contradictory but what it means is careful selection is tantamount to turning on the TV or reading your local business journal . I learned some valuable insight from some of the best in the business between tequila and surfing so all in all it was a very fruitful and rewarding experience which yielded a tan, no extra weight surprisingly (all that time in the surf I guess) and fresh ideas about the Latin American markets.

Concluding, as promised I have attached more of my article entitled "The types of workers" and the last installment will be in the next Money Matters update. For consistent reading and for those that missed the first part, the entire article up to a certain point is attached.

Jambo and good reading!

Marc

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Spinners, Earthmovers, Doer’s, Dawdlers, Talkers, Slugs, Fakers, Weasels and Crooks.

What does it all mean? Fancy words or animal descriptions? Actually these are my own classifications of different types of people as they relate to their own career path

Sounds confusing but read on and see if you recognize any of the work types described below.

The easiest to spot are the Earthmovers and Crooks. Earthmovers start those incredible companies that revolutionize how we live in some way or another. They may or may not be college educated, and many attend Ivy League schools only to drop out midway through because they know their ideas don’t need degrees to make them work. Bill Gates, Mark Zuckerberg, Steve Jobs and Elon Musk come to mind. Billionaires all of them and they have changed the way we live our lives through their genius. As for community, Earthmovers usually operate alone or in pairs.

Crooks are also easy to understand and identify. They are basically, well, crooks. They lie cheat and steal to make a living and are usually a victim of a personality disorder or two. Crooks operate alone but if you find two of them in cahoots, the con is usually much bigger in scope.

Easy enough but now let’s look at the others.

Doer’s are good folks. They are the pragmatic ones. They start small businesses that usually succeed. They also make good employees and know the value of a buck. They work hard and treat others fairly. They are usually honest and live fruitful lives that contribute to society and they rarely take handouts unless badly needed and then only do so temporarily. Most of the working class fit in here and likely you do to. Doer’s operate solo or in groups of any size.

You can recognize Dawdlers, Talkers and Slugs because they have many similar characteristics.

Dawdlers just don’t want to work and think the world is one big jelly bean field where they can lie around and write poetry. None of this “conformist working nonsense” for them. Dawdlers idle away their hours in coffee houses, hiking or hanging out at the river during the day while everyone else is working.

Talkers, like Dawdlers also don’t like working much but spew forth verbal diatribes to counter their low self-esteem which got that way by not working. Talkers might make up many of the people you see during a daytime protest rally. They’re there because they’re not working. Talkers often end up as activists or working a few hours a week at a non-profit to convince themselves their unemployment is necessary so the world can hear their point of view. Like Dawdlers, they are often on the public dole while complaining about the very system that gives them their checks. Dawdlers and Talkers can’t make it in the private sector where performance is actually expected so they operate around the fringes of normal society. Both Dawdlers and Talkers are usually found in large groups.

Slugs have similar characteristics as Dawdlers but Slugs just can’t catch a break. They rarely hold jobs longer than a few months and constantly blame others or circumstances out of their control for their plight. When you catch up with a slug, which is easy to do, they will always tell you how hard their life is and how bad luck follows them like the plague which is usually true. Although the world is full of Dawdlers and Talkers, you won’t run into many Slugs. Their lot in life is so sorrowful apparently God didn't’t make many of them and that’s a good thing. Slugs live solo except for the rare occasion where a mate is found that takes care of them.

Fakers are like Talkers as both usually have outward personalities. Fakers attempt to appear like Doer’s but much of it is illusion and therein lies the difference. Fakers usually have long resumes with many jobs listed and their spotty work resume shows a nomadic quality to it. They move jobs and locations often and may attach self-made titles after their names. A variety of letter designations you likely have never heard of trail their signature page. These people may end up end becoming the proverbial life coach or a consultant of some kind. They also can move in and out of careers where a few months of study can yield an impressive sounding certification like realtor or physical trainer. No offense meant to you hard working folks in these careers of course. It’s just that Fakers are the type that enter your field then leave when the going gets tough and muck up the business for the rest of you. Heaven help the people who follow the advice of such characters. They are where they are because they can’t hold a real job for any length of time. Fakers usually operate alone but support each other to further each other’s illusion.

(to be continued...)

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Fixed income recovers

After Trumps November 8^th election win, no one really knew how the markets would react the day after on November 9^th. Stock futures, which give an indication of what overnight traders are doing first showed a horrendous correction was coming when the market opened and gold skyrocketing higher. Not so when the opening bell rang next morning. Stocks took off and gold fell. What really shocked investors and not in a good way was the selloff in fixed income. This area includes bonds, preferred stocks, treasuries, municipal bonds, utilities, and other investments that pay a fixed rate of return and are regarded as less volatile than traditional stocks. This type of investment is likely what your grandfather held and it’s a favorite among widows, orphans and conservative investors. Normally not regarded as moving very much up or down in price, the weeks following Trumps victory witnessed a virtual blood bath in fixed income.

"The bond market is supposed to be a dull, boring, stable place," said Colin Lundgren, head of U.S. fixed income at Columbia Threadneedle Investments. "Instead, it's been at the center of the storm."

As I wrote in December article entitled “The fixed income sell off”, fixed income does have a self-correcting type of quality to it which at that time might have calmed the nerves of those conservative investors who saw balances drop in speed out of the ordinary of what they were used to seeing.

When prices drop on the price of a fixed income investment, because the interest it pays is fixed, the yield to new investors buying in after the drop goes up. That means investors buying at distressed prices will get higher yields as prices continue to fall. This type of slingshot of rates versus prices can entice new buyers into a falling market because at some point yields get too juicy for new investors to resist. One might also add when investors panic, they sometime throw the baby out with the bathwater and what would otherwise be a modest sell off suddenly becomes an all-out rout. This can cause the price pendulum to swing in one direction (down) to the advantage of those willing to step in with cash to scoop up some perceived deals which in the fixed income market means better yields.

Apparently at least some investors took the bait and starting a few months after the sell-off prices began to climb in many fixed income markets and continued to do in the recent weeks. Not to say the sell-off couldn't’t begin again as no one can predict market directions but sometimes common sense, knowing how certain investments perform and some basic math can lead to some good buys in the markets.