Tuesday, November 07, 2017

Delaying Income and Advancing Deductions to Take Advantage of Expected Tax Reform

I think it's a good idea to look at the possible impacts of tax reform on our finances.

In my quick review,  I've concluded that I will lose out on deductions but gain on the increased child tax credit and lower tax rate.   Net, I will be slightly ahead and can manage our income stream better to minimize taxes.  In addition, our tax return will be significantly simpler, requiring far less time to do each year.

So for 2017, we will move forward all deduction, e.g. medical expenses, charitable contributions and property tax.   We will delay income such as IRA withdrawals until next year.    In addition, we will increase the amount of income from dividends, since I expect the 0% capital gains tax rate for those in the lowest tax bracket to be maintained.

Of course, YMMV since each individual's situation will be impacted differently by tax reform.

For more on Ideas You Can Use, check back every Tuesday  for a new segment.

This is not financial or tax advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Saturday, November 04, 2017

Still All Clear for a Market Top

Previously, I posted about my three signals for a market top: 1) Bears capitulating; 2) Beaten down stocks reach 52 week highs; 3) Oil reaches $100/barrel.      First oil is still at about $55/barrel, second stocks such are Under Armour, GE,  and JC Penney are hitting new 52 week lows; and third bears are discouraged, but still bearish.

However, I am still a bit cautious and selling some of my winners to take profits.  In addition, I am shifting my equity weights towards REITs (for guaranteed income), and  international (for higher relative returns).  At this point, I don't think there will be a severe correction or crash will occur in U.S. markets.  Rather international markets will outperform the U.S. and so I am shifting my weightings toward those markets.

Disclosure:  At the time of this post, we owned shares of Under Armour, JC Penney, and GE... unfortunately.

For more on  Reflections and Musings, check back Saturdays for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Monday, October 30, 2017

Taking Some Profits and Sticking with Winners

For now, I am continuing to take some profits but selling parts or all of my winning positions. In many cases, the stocks have advanced further, which indicates the bull market is still intact.  We are still maintaining our core positions, and thus are still participating in the gains.

Although I'm tempted to buy some underperforming stocks, I am going to resist.  It seems that underperformers continue to underperform, e.g. GE, Under Armour,  and Oil related stocks.  On the other hand, outperformers tend to continue to outperform, e.g. Amazon, Alphabet, Nvidia and Netflix.

If I take any new positions, I will focus on buying stocks that have been outperforming.   My only variance from this strategy is to increase our positions in certain REITs, which mostly have dropped from their recent 52 week highs.   The REITs offer nice dividend payments, which are great for tax deferred retirement accounts, since REIT dividends are taxed as ordinary income.

Disclosure:  At the time of posting, we owned shares of GE, Under Armour, Amazon, Alphabet and Netflix.

For more on Strategies and Plans, check back every Monday for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Saturday, October 28, 2017

More Exuberance but Not Yet Irrational

Amazon, Alphabet (parent of Google), Microsoft, and Intel had outstanding earnings and their stock prices advanced significantly on Friday.   Apple and Facebook, which report this week also advanced nicely.   These tech stocks (excluding Intel) gained $181 Billion in market cap on Friday.

Definitely, more exuberance. (Even I am starting to want to put more funds in these names.) However, it doesn't seem irrational yet.

First, the bears haven't capitulated.

Second, my beaten down stocks are still at or near their 52 week lows.

Third, oil is higher but no where near $100/barrel.

So while I remain cautious, I expect the market indices to continue grinding up and lengthen the most unloved bull market ever.

Disclosure:   At the time of posting, we owned shares of Amazon, Alphabet, Apple, Facebook, Intel and Microsoft.

For more on Reflections and Musings, check back Saturdays for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Tuesday, October 24, 2017

Seth Klarman: The Question Investors Should Be Asking

According to Baupost's Seth Klarman, the question investors should be asking is, "How can I afford not to sell with the risks I'm taking on?"  I think he makes a good point since the downside risks of this market are much greater than the upside potential.  Raising cash for future opportunities and being invested at a (much) lower allocation makes sense to me at this time.

For more on Ideas You Can Use, check back Tuesdays for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Sunday, October 22, 2017

What If Low Interest Rates Continue?

Most people are expecting interest rates to rise and inflation to increase.  But what if it doesn't?   Could this bull market continue for several more years, despite all the skepticism?

My thinking is yes, if interest rates continue to be low.

So I am going to start hedging against interest rates being lower for longer by investing more in REITs, dividend paying stocks and long term CDs.


For more on New Beginnings, check back Sundays for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Saturday, October 21, 2017

I'm Not This Good

"Don't confuse brains with a bull market." ~ Wall Street adage

 Everyday, it seems, our accounts are going up and frequently hitting new highs.  It would be wonderful if it was do to my exceptional stock picking.   However, I know that it is more likely due to an exceptional bull market.

So while I'm enjoying the market advance, I'm not bragging about it.   I know if will only take a bear market, or even a lengthy correction to make me look a stupid.

But until that bear market or correction comes, I will continue to take advantage of this market rally by staying invested and taking some selective profits.  That way I will feel a little less stupid when the inevitable correction or bear market appears.

For more on Reflections and Musings, check back Saturdays for a new segment.

This is not financial or investing. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Friday, October 13, 2017

Protecting Profits and Raising Cash

At 10 years into retirement, I cannot afford a 50-70% decline in our overall savings.  First, we are entirely dependent on our savings to cover living expenses.  Second, we don't have the luxury of waiting 3-5 years to recover our losses.

We have been enjoying this bull market and the recent advance.   However,  I also feel the downside risk is greater than the upside potential, and the risk continues to grow.    So I've been taking the opportunity to sell some profitable positions and raise some cash.  

For now, I am maintaining our core investment positions, acknowledging that the amount may lose over 50% in the next bear market.   However, since our core position represent about 33% of our investable assets, I believe we can safely handle a major decline in the stock market.   Thus, I can sleep well at night, despite the possibility of a significant bear market.

For more on Reaping the Rewards, check back Fridays for a new segment.

This is not financial, investing, or retirement advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Wednesday, October 11, 2017

My New Pain Trade Signal

"Markets tend to deliver the maximum amount of punishment to the most investors from time to time." ~ Wall Street Adage

The current greatest pain trade is shorting the market.   The next biggest pain trade is not being invested and being entirely in cash.   Interestingly, investors in these situations don't feel they are in a pain trade.   Most of them still feel they are right, but perhaps a bit early.

These investors are convinced that a market correction is imminent and refuse to consider that the possibility of the bull market continuing.  As long these investors continue to justify their investing strategy, the market will continue to grind up and perhaps even melt up.   It's when these investors finally throw in the towel and admit their pain trade that I will worry about a market top.

For now, I am still bullish, but also cautious.  So I am taking some profits in our trading positions, while maintaining our core holdings, which will continue to benefit from the rising market.

For more on The Practice of Personal Finance, check back Wednesdays for a new segment.

This is not financial or investing  advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Tuesday, October 03, 2017

Bears Getting Closer to Being Right

Every passing day is a day closer to a bear market.    So every day, the bears are closer to being right. So I'm preparing for the inevitable.   I'm trimming some of our positions, raising cash and creating an investment plan for when the market drops 10%.

The market will fall 10% someday.  And we'll be ready for it.

For more on Ideas You Can , check back Tuesdays for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC