Topley’s Top Ten – January 24, 2020

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Matt Topley
January 24, 2020

1.Software Private Equity Deals Jump to 17% of Overall PE.

2.How high above the 200-day can the S&P 500 get?

Posted January 21, 2020 by Joshua M Brown-Reformed Broker

Thebig news this past week is that the S&P 500 got way out ahead of its200-day moving average – more than 11% above, in fact.

Michael wrote about how shitty of a timingsignal this measure is here, if you haven’t read it yet you CANNOTmiss it.

In the meanwhile, Jon Krinsky notes thatwhile we may be stretched based on recent history, in the 1990’s, the S&Pwas routinely more than 10% above the 200-day moving average, which led toconsolidation periods followed by even higher new highs.

Here’s two charts from Jon:

It’s notable that this extreme breadthsurge has happened with the SPX stretched vs. its 200 DMA. It is now at thewidest spread (over 11%) since January 2018. Of course when momentum getsstrong like it was two years ago, and it is now, there is no rule for howstretched things can become. It peaked at around 14% in Jan. ’18, and routinelywas above 15% in the late 1990’s

By mid 1995, the SPX was 14% above its 200DMA. You can see it routinely traded above that threshold over the last half ofthe decade, and while it did check back to its 200 DMA many times, there wereother times where the market moved sideways or pushed even higher

Source:

What Happens When You Have a Breadth Surgeand the SPX is Stretched?Baycrest Partners – January 20th, 2020

3.The Growth of Non-Interest Rate Sensitive Sectors.

4.Household Liabilities to Net Worth Support Spending.

5.Financial Stress Index At All-Time Lows.

In an attempt to avoid focusing on a singleindicator at the expense of others, economists and analysts created compositeindexes of several of these indicators. In early 2010, the St. Louis Fedcreated the STLFSI, which uses 18 weekly data series to measure financialstress in the market. Weekly series are used to have a more “real-time” indexto measure rapid changes in the market. However, the tradeoff of having ahigher-frequency index is greater volatility and potentially more noise.

The STLFSI is constructed from seven interestrate series, six yield spreads and five other indicators.1 Each of thesevariables captures some aspect of financial stress. Accordingly, as the levelof financial stress in the economy changes, the data series are likely to movetogether.

How should the index be interpreted? The average value of theindex, which begins in late 1993, is designed to be zero. Thus, zero is viewedas representing normal financial market conditions. Values below zero suggestbelow-average financial market stress, while values above zero suggestabove-average financial market stress.

6.Seven Tips for Helping Elderly Parents With Their Finances

  • Publishedon January 22, 2020

Chair & President, Charles SchwabFoundation; SVP, Charles Schwab; Chairman of the Board, Schwab Charitable

DearCarrie,

Myparents are in their early 80s. Fortunately, they’re in relatively good healthand still quite independent, but I want to help them be prepared should thingschange. How can I get involved with their finances without being intrusive?

—A Reader

 DearReader,

Whilepopular wisdom might say that 80 is the new 60, the reality of aging means thatno matter how young we may feel now, chances are we’re going to need some typeof help in the future. And while it’s often difficult to get older adults toaccept that possibility, being prepared ahead of time is the best way to easethe transition.

Thatsaid, money can be a touchy subject at any age, so you’re wise to be sensitiveto your parents’ desire for independence and their potential reluctance todiscuss the future. But the realities of today—particularly the prevalenceof scams targetingthe elderly and elder abuse—meanthat it’s more important than ever to get the conversation going. Here areseven tips for helping your elderly parents:

#1.Start by asking your parents about their current financial security

Alot of families don’t like to talk about money but if you come from a positionof concern for your parents’ current well-being, they might feel morecomfortable. And at their age, it only makes sense for them to share certainfinancial details with their family. Here are some questions to start with.

  • Are they easily handling everyday expenses? Do they have enough income to cover the essentials—or even things like a gym membership that help them thrive? If they’re struggling to stay on top of bills or debts, you might help them create a more realistic budget or set up automatic payments for certain monthly expenses. You may take something like auto-pay for granted, but your parents may not have considered it.

  • Do they have a financial advisor? Would they be willing to introduce you and perhaps include you in a meeting? If they don’t have an advisor, maybe you can take the lead in helping them do a simple financial plan. At the very least, you might help them take an inventory of their financial resources—pensions, IRAs, brokerage accounts, and Social Security benefits—so they have a clear idea of the money they have available for both the short and long term.

  • Have they updated their estate plan? Perhaps you’ve already talked to them about whether or not they have an estate plan in place, including an Advance Healthcare Directive and powers of attorney for both finances and healthcare decisions. If not, don’t hesitate to bring it up because a basic estate plan is something everyone should have no matter their age—yourself included. If they have a plan, when was the last time they reviewed it? Have things changed since then?

  • Are important documents accessible? In case of emergency, it’s important that you or someone else your parents trust be able to locate important documents. These can include: wills, trusts, bank and brokerage statements, insurance policies, mortgage documents and safe deposit box information as well as passwords for online accounts.

Whenintroducing these topics, make it clear that you’re not questioning theircapability; you just want to be a resource should they need help.

#2.Discuss their views on future living arrangements

The90-year-old mother of a friend of mine is adamant that she wants to stay in herown home no matter what. On the other end of the spectrum, another friend’sparents decided to move into a continuing care retirement community before itbecame necessary because they wanted to make the decision while they were stillcapable. You might want to talk to your parents about their preference shouldthey need physical help. Position it as just an exploration of futurepossibilities—not any recommendation on your part.

Ifthey’re open to the idea of moving into a senior community at some point, nowmight be the time to do a little research together on senior living facilitiesin their area.

#3.Plan ahead for the cost of care

Homecare and assisted living are both costly propositions. According to the Genworth 2018 Annual Costof Care survey, the national median annual cost for assisted livingis $48,000; a home health aide is slightly higher at $50,336. And so muchdepends on where you live. In the San Francisco Bay Area, those home care costsare closer to $70,000 a year. In Alabama, they’re under $40,000. And thesecosts are generally per person.

Froma practical standpoint, it makes sense to discuss your parents’ desires and thepotential costs ahead of time so they know what their real options are. Whilefuture care can be an emotional flashpoint, it’s also an important financialconsideration because they—and you—should know what they’re able to afford andif you might need to supplement any costs.

#4.Know what benefits and services are available

Accordingto the Council on Aging, there are more than 2,500 benefits programs nationwideto help with the cost of elder care. And it’s easy to do an online benefits checkup. The Family Care Navigator provided by the NationalCare Giver Alliance can also help you find support services in yourstate. Benefits.gov and your local Areaon Aging are also helpful resources.

#5.Be on the alert for abuse

Financialfraud is a very real threat these days. According to SIFMA, seniors in the U.S. lose an estimated $2.9billion every year in financial exploitation. And that’s only the reportedcases. While senior investor protection laws are in place in many states andmore are in the works, I think everyone needs to be on the alert for any kindof potential scam. SIFMA is a goodresource for specifics on what to watch out for and action you can take.

Besure to discuss this with your parents. As a precaution, it might be wise atsome point for you or another trusted family member to have your name oncertain of your parents’ accounts to monitor transactions.

#6.Have a family meeting

Youdon’t say if you have siblings, but if so it’s important that all of you areaware of your parents’ situation and desires, and agree on who is going to takethe lead. It’s important for two reasons: 1) to assure there’s nomisunderstanding or disagreement if your parents do need help in the future,and 2) to make sure that whoever takes the lead gets the support they need inwhat could be a very difficult situation.

#7.Keep talking—and listening

Insensitive situations like this, it’s all about communication style andapproach. While the burden can often fall on the kids to get the conversationgoing, I want to encourage any older adults reading this column to help theirchildren out by bringing these things up themselves. The more open you all areand the more mutual understanding there is about the future—both emotional andfinancial—the more you’ll all be able to enjoy the present.

Havea personal finance question? Leave it in the comments. Carrie cannot respond toquestions directly, but your topic may be considered for a futurearticle. For Schwab account questions and general inquiries, contact Schwab.

(0919-9XTF)

Theinformation provided here is for general informational purposes only and is notintended to be a substitute for specific individualized tax, legal orinvestment planning advice. Where specific advice is necessary or appropriate,consult with a qualified tax advisor, CPA, financial planner or investmentmanager. 

Carrie Schwab-PomerantzChair & President, CharlesSchwab Foundation; SVP, Charles Schwab; Chairman of the Board, Schwab

7.Future of work: 5 top insights from Davos experts

Poppie MphuthingEditorialLead, Global Leadership Fellow, World Economic Forum

Fourth Industrial Revolution

1)It’s smart to hire people smarter than you

Thisis the top advice from Jack Ma, Executive Chairman Alibaba Group Holding.

“WhenI hire people, I hire the people who are smarter than I am. People who four,five years later could be my boss. I like people who I like, who are positiveand who never give up.”

Thebest people are optimistic and don’t complain, he says.

Manoted that he survived the corporate world for 20 years because he was ateacher in his former life.

“Youalways want your students to be better than you, to be a mayor, not in prison. Rulenumber one: help people to be better than you are,” he said.

2)New collar workers are the future

IBMCEO Ginni Rometty says that as automation continues apace the skills gap andjob insecurity fears are real.

“Whenwe talk of a skills crisis, I really do believe that 100 % of jobs willchange,” she said.

Butshe argues the crisis is not impossible to overcome.

Romettywants to see the development of a new education and career model: new collar,not blue collar or white collar. This means investing in skills development andresponding in real time to the changing skills landscape. It also meansbreaking free from traditional models of recruiting those with 4-year andadvanced degrees.

“Weas a company are passionate that if we don’t fix this issue, to bridge thisskill right now, at the rate it’s moving, you will have unrest,” Romettysaid. “And so people have to have a route in.”

Watchthe full session:

3)Recruiting women into technical roles will make machines learn more efficiently

LinkedInCo-Founder and Vice-President of Product Allen Blue notes that AI and machinelearning are becoming fundamental to how all technology is built, when oneconsiders phones, banking and many other products and activities.

“It’simportant, as we go forward, that we are designing and building that tech inthe right way,” he said, reflecting on the inherent biases that many algorithmshave because they were designed and built by white males.

Blueargues that technology can positively support flexibility of the workplace. Itenables learning via online, video-based, non-real time learning. Certaintechnology also enables people to balance their lives, by working remotely.

4)Invest in training the youth and the unemployed

France’sMinister of Labour, Muriel Pénicaud, described her re-skilling programme, whichincludes giving employees 500 Euros a year to choose their own trainingprogramme.

“Todayaccess to capital is easier than access to skills,” she said, noting theneed for pro-action.

“Manyof our citizens think they are victims of globalization and technology. Whenyou are not in the driving seat, change is always a threat. You need to be inthe driving seat, you need to be able to choose your future.”

5)Survivors of mental health challenges are good for business

Mentalhealth was on the agenda at Davos with a number of discussions on how to breakthe stigma and create more supporting workplaces. John Flint, the CEO of HSBC,noted that survivors are assets.

“Thosewho have recovered often possess a resilience and resourcefulness,” hesaid.

Flintwants to turn the bank into “the healthiest human system.” He described thisnot as a fuzzy, feel-good effort, but as a question of performance.

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8.The Secret to Success is a Question of Habit. Here’s 10 Powerful Habits Practiced by Top Executives, and a Guide For How to Perfect Them.

Thesecret to success is a question of habit.By Laura Garnett at Business Insider

The new year (and decade!)always brings a renewed energy. We’re excited about change, eager to setresolutions, and have a newfound willingness to work on ourselves.  

However, most people failto conquer their resolutions because they don’t create newhabits around the behaviors that they want to change. 

Building new habits isn’thard, but it does require diligence, discipline, and commitment to following aplan for at least 60 to 90 days. The key is to start small and pick one or twohabits you want to focus on. Once those habits are ingrained, you can add moreover the course of the rest of the year. 

Here is a list of the mostpowerful habits successful people incorporate into their lives. When you’recommitted to not only starting these behaviors but to making them an ongoingpart of your life, your potential is truly endless.

1. They work smarter, not harder

The most successfulexecutives I know don’t log 90-hour weeks. Instead, they look for ways to bemore efficient with their time. 

How to build it: Startto notice when you’re most productive. Do you get twice as much done in themornings? Do you get your second wind after dinner? Identify the times when youdo your best work, and carve out an hour or two every day to get a lot done inthat time frame. 

Breaks are equally important.See if you can “block” your schedule and accomplish brief chunks of focusedwork, then take breaks to recharge. ThePomodoro technique — 25 minutes of work followed by five-minutebreaks — is one method, but choose the lengths of time that work best for you.You’ll be surprised at how much more you can get done.

2. They value who they are

I truly believe that each ofus has our own unique genius: the type of work and thinking at which we arebest. The most successful people know their genius well — they value it inthemselves, and they seek to use it every day. 

How to build it: Ifyou’re not sure what your genius is, thisarticle can help you identify it. Every day, read the languagethat defines your genius, then say to yourself, “I value who I am and the valueI bring to the world.” Do this at least twice per day, every day for twomonths. You will quickly see how amazing it feels.

3. They continually educate themselves

Even the most successfulpeople I know are never content with the status quo. They’re constantlylearning and looking for ways to grow.  

How to build it: Withthe abundance of information at our fingertips, this is simple. Think throughthe skills you’d like to hone or the subjects you’d like to learn more about,and find books, videos, or classes that will take your expertise to the nextlevel. The hard part is sticking to these assignments — but try to make it funby tackling one per month and rewarding yourself for completing it.

4. They’re proactive about their careerhappiness

All of us, from time to time,feel stuck or unhappy at work — or have a sneaking suspicion that something’snot working. But successful people don’t let that paralyze them. They getcurious, they start looking for data, and they take action. 

How to build it: Forstarters, download my PerformanceTracker, a weekly check-in exercise that helps you measure aspectsof your professional life — like how often you’re “in the zone” and doing workthat’s meaningful to you. Do this for a month, and you will be able to clearlyidentify what’s working in your job and what’s not. You will have the data youneed to be more proactive with your career, whether that means spending lesstime on tasks that aren’t fulfilling or looking for a new role altogether.

5. They build their confidence

There are a lot ofmisconceptions about confidence. Many people think you’re either born with itor you’re not. That’s simply not true. Confidence is a skill, and people whohave a great deal of it have typically worked diligently over a long period oftime to achieve it. 

How to build it: Payattention to negative messages you’re telling yourself. Do you compare yourselfto your colleagues, or beat yourself up after tough conversations? See if youcan just notice that thought process for a week or so. Once you’re in the habitof noticing, tell yourself a different, more positive message, like “I am justas talented as my co-workers,” or, “Everyone makes mistakes. I have the skillsI need to learn from this and move forward.”

6. They aren’t deterred by failures

Ask any successful person,and each will have a long list of failures. They aren’t deterred by thesestumbles; rather, they learn from them. 

How to build it: Thiscan be scary, but start tracking your failures as they happen — withoutjudgment or blame. When something doesn’t go the way you want it to, pause andwrite down what happened. Then (later, if you need to), think through what youmight be able to learn from the situation. If it’s hard to find opportunitiesfor growth, think about the advice you might give a friend in a similarsituation. Do this for two months, and you’ll start to equate failure with atool for being better.

7. They ask for feedback regularly

Similarly, the strongestleaders aren’t afraid of feedback — from their peers, their higher-ups, or eventheir subordinates. Done right, this can be an equally powerful tool forlearning and growing.

How to build it: Makea list of 10 people you work closely with or know well and trust. Create threequestions that are specific to the feedback you desire. 

For example, if you’relooking for feedback on your leadership style, you might ask: “What’s onequality that you really enjoy about my leadership?” or, “What’s one time in thepast month you think I could have handled a conversation differently?” 

Mention that you’re seekingmore feedback and will reach out again in three months with additionalquestions. Encourage them to do the same and let them know you’re more thanwilling to reciprocate.

8. They enjoy the process of their work — notjust their achievements

Our society tends to focus onachievements: landing a promotion, scoring a big new client, or making a highersalary. But it’s healthier, more fun, and less taxing to enjoy the process ofyour work, rather than living for the wins. 

How to build it: Eachday, ask yourself: “Am I enjoying the process of doing my work just as much, ifnot more, than achieving the goals I’ve set?” When you start to answer “yes”more than “no,” you’re on the right track to receiving happiness from the rightplace. If you’re not there yet, do the work to understand why achievements aredriving you and how you might be able to add more enjoyment into your work.

9. They don’t listen to society’s rules — theymake their own

This is all about being whoyou are — no matter how different that may be from others, your friends, orsociety. If you can make this a habit now, your career and life will be muchhappier and better for it.

How to build it: Everytime you need to make a big decision, write down all of the pros and cons. Gothrough them again to reveal the origin of these ideas. Are they true to whatyou actually believe, or are they messages from your parents, workplace, orsociety? If it’s the latter, scratch those items out. Do this for every bigdecision, and you will start to trust yourself and make the decisions that areright for you. You will soon find that you’re living a life for yourself, andnot for others.

10. They make health a priority

Finally, remember thatsuccess isn’t just about your work; it’s about you as a whole person. You willstruggle to thrive if your health and wellness takes a back seat.

How to build it: You’veheard most of this before, but it bears repeating: Get good sleep (I love Michael Breus’s newsletter,which shares tips and products to help you sleep better). Exercise severaltimes per week . And if you haven’t already, builda meditation practice. Downloadan app, hire a meditation coach, find a meditation center, or bookat least 15 minutes in your calendar to pause and focus on your breath. Do thisfor at least 30 days, and before you know it it will be something you can’tlive without.

Originally published on BusinessInsider.