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Weekly Market Review

Weekly Market Review

Good afternoon,

“The purchase of Units is highly speculative and involves significant risks. The Units should not be purchased by any person who cannot afford the loss of their entire investment.”

This was the first sentence of the Risk Factor paragraph for the subscription agreement of an investment we reviewed recently. It goes on for 4 more pages, double sided, in order to detail how exactly an investor could lose their entire investment.

“Dependence on the manager.”

“Substantial fees will cause losses unless offset by profits.” (This might be our favorite excuse…)

“Unspecified investments.”

“Portfolio company risks.”

“Limitations on liquidity of investments.”

And so on. The document goes on to say that they might have forgotten something and an investor could lose the entire investment by some means that they haven’t thought of yet.

This is a classic case of caveat emptor.

The WMR has been in this game for a long time. Investments have risks. We get it. Sometimes good things happen and sometimes they don’t. No guts, no glory. No pain, no gain. Or some other cliché. This information doesn’t make it a good or bad investment necessarily, we just have to ask, are you ok with the risk? Take your time, there is no correct answer. Some clients will be fine with such a scenario. Others, not so much. If reading those paragraphs causes you to choke on your coffee, then maybe that program isn’t for you. On the other hand, if it causes nothing more than a shoulder shrug and a “meh,” then perhaps there may be a place for it in your portfolio. Our job as the advisor is to figure out which is right for you and implement the appropriate solutions. Not every investment is right for every investor, just like not every diet is right for every dieter, but that doesn’t mean that they won’t work.

Risk = A situation involving exposure to danger, harm or loss.

Diet = The sum of food consumed by a person or other organism.

Remember the “Great Recession?” Of course we do. The world was ending, stocks were down, real estate was down, housing was down, mortgages were in default, banks and brokerages were failing, insurance companies were forced to merge, etc. It was only a short 10 years ago this week that the stock market bottomed on March 9, 2009.

https://www.cnbc.com/2019/03/04/the-10th-anniversary-of-the-climactic-march-2009-market-bottom-arrives-this-week.html

According to the article, the S&P index has gained an average of 17.8% annually since that date. As we’ve illustrated repeatedly over the years and contrary to popular belief and the generally accepted narrative, the government did not solve the problem. The government, in fact, caused the problem in the first place (by requiring banks to lend to people who shouldn’t have qualified) and then made the problem worse by their use of “mark to market” accounting. QE, quantitative easing, which is incorrectly lauded as the government sanctioned solution to the problem was implemented in late 2008 and was ineffective in slowing the decline. It’s not a coincidence that the day that “mark to market” was repealed on March 9, 2009 was also the beginning of the recovery. We don’t include this commentary today simply to bash government, although that is a fun byproduct, we include it to remind our readers that as bad as the world felt in 2009, it did not end. And those of us who stayed engaged and stayed invested recovered quickly and fully. We include the article to remind ourselves that the world will not end. Ever. And to remember that we need to stay engaged and stay invested at all times.

Don’t believe everything you read. Which may sound ironic coming from an email newsletter. But the Federal Trade Commission (FTC) just prosecuted one company for buying and posting fake user reviews of its product on Amazon. The company was hawking a weight loss supplement and paid another company to post glowing 5 star reviews with accompanying testimonials. Fake news. Sorry, we mean fake reviews. Which is a big no-no.

https://www.cnbc.com/2019/03/01/ftc-cracking-down-on-fake-amazon-reviews.html

This is only the first company that the FTC prosecuted, they expect to chase others. So that old saying, if it’s on the interwebs it must be true, may not be accurate. Caveat emptor again.

Just for fun, here is this year’s Forbes list of Billionaires. The exclusive 3 Comma Club, if you will.

https://www.forbes.com/billionaires/#77fba731251c

There are 2,153 of them this year, down from 2,208 last year. It was a tough year for the billionaires, there’s fewer of them and their net worth declined. Proving that economic conditions can affect all income levels. A billion here and a billion there and pretty soon you’re talking about real money.

We’ve decided that we need to have a talk with Siri. We’ve programmed her to speak with an Australian accent because we find it more appealing than her factory setting, but in this case, we’ll do the talking. We’ve mentioned before about how we find Siri a little ominous. She’s helpful to be sure, but she’s also a little invasive. She seems to know what we’re about to do before we do it. And we’re pretty sure she’s telling someone about it, marketers most likely, but maybe others as well. But some new information has come up which makes us think that maybe Siri isn’t as all-knowing as we suspected. She has been known to throw a pop up on our phone when we get in the car, “It’s 12 minutes to the golf club, take M-10, traffic is light.” Or something along those lines. Well, lately, as we make our daily trek to the health club first thing in the morning, the pop up has read, “It’s 6 minutes to Jimmy Johns, take Maple, traffic is light.” C’mon Siri. First of all, there is a Jimmy John’s in the strip center next to the health club, but that’s not where I’m going at 6am. And Siri, if you were paying attention, you’d know that Jimmy John’s isn’t even open that early. And if you really knew me as well as you pretend, you’d know that Jimmy John’s, while tasty, doesn’t currently fit in to our diet program. So Siri, do your homework or keep your mouth shut.

Let’s finish this week and continue our streak of WMR movie reviews. This movie is an older one, and one we’ve mentioned before. We were reminded of it because it seems there are plans to remake it into a TV series with the original cast. The movie we speak of? The Sandlot. One of our favorites ever and not just because we coached little league baseball for a decade. Just a fun family movie about kids and baseball and a beast. If you haven’t watched it, you should. And watch without commercials if possible. https://www.imdb.com/title/tt0108037/?ref_=fn_al_tt_1

We’re not sure how we feel about it being made into a TV series. https://bleacherreport.com/articles/2823108-the-sandlot-to-be-remade-into-tv-series-sequel-featuring-original-cast?utm_source=cnn.com&utm_medium=referral&utm_campaign=editorial

The Sandlot sequels, there were 2, weren’t especially good. In fact, they weren’t good at all. Sometimes, and this is just our opinion, when the original is a masterpiece, perhaps it should just be left alone.

Lf25 – “Heroes get remembered, but legends never die.”

Have a great week.

Michael J. Acho, MBA, CFP®

Private Wealth Advisor

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Lincoln Financial Advisors/Sagemark Consulting

1000 Town Center, 26th Floor

Southfield, MI 48075

248-948-5100 direct

248-948-5101 fax

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Michael.Acho@LFG.com

www.LFAMichigan.com

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If you do not want to receive future emails, please call me at 248-948-5100, or email me at michael.acho@lfg.com or write me at 1000 Town Center, 26th Floor, Southfield, MI 48075.

 

Lincoln Financial Advisors Corp. and its representatives do not provide legal or tax advice. You may want to consult a legal or tax advisor regarding any legal or tax information as it relates to your personal circumstances.

 

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Michael J. Acho is a registered representative of Lincoln Financial Advisors Corp.

 

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