Topley’s Top Ten – September 3, 2019

Author

Matt Topley
September 03, 2019

1.Min Volatility ETF USMV Second in Flows to S&P….

Barrons

The iShares Edge MSCI Min Vol U.S.A. ETF(ticker: USMV) has attracted nearly $9.5 billion this year, second only to thebroader and much better known VanguardS&P 500(VOO). The iShares ETF has swelled 42% in the past eight monthsto $32 billion

The average stock in the iShares ETF trades for 24 timestrailing 12-month earnings, versus 19 for the S&P 500; the ETF overalltrades at a 17% premium to its MSCI benchmark. A recent study from LeutholdGroup found that low volatility stocks, relative to their higher volatilitypeers, are 99% more expensive than they have been over time, going back to1990.

2 Big Volatility ETFs Have Very Different Approaches By Stephen Gandel

2.Three Bond Kings Underperform….Underweight Corporates and Lower Duration that Benchmark.

Three U.S. bond kings wield same strategy, get same result: lag their peers

NEW YORK (Reuters) – Three names dominate the U.S. world of bondinvesting – Jeffrey Gundlach, Dan Ivascyn and Scott Minerd. But funds run bythese star investors are lagging their respective benchmarks this year.

The proximate cause forthe underperformance of these high-profile bond investors: the monstrous rallyin U.S. corporate bonds and Treasuries.

CORP-Massive Move in Corporate Bonds

3. ETFs With The Lowest Valuations

Full Story

4.This Will Be The Number One Topic For Presidential Election

Historic Asset Boom Passes by Half of Families-WSJ

Scantwealth leaves families vulnerable if recession hits, economists say

By David Harrison | Graphicsby Danny Dougherty and Maureen Linke

Thedecadelong economic expansion has showered the U.S. with staggering new wealthdriven by a booming stock market and rising house prices.

Butthat windfall has passed by many Americans. The bottom half of all U.S.households, as measured by wealth, have only recently regained the wealth lostin the 2007-2009 recession and still have 32% less wealth, adjusted forinflation, than in 2003, according to recent Federal Reserve figures. The top1% of households have more than twice as much as they did in 2003.

This points to apotentially worrisome side of the expansion, now the longest on record. Ifanother recession comes, it could be devastating for people who have only justrecovered from the last one.

5. There’s been a 62% spike in people getting prenups, and experts say it’s being driven by millennials

-Millennials are increasingly interested in signing prenuptial agreements before getting married, research says.

-Later marriages, less “concrete” assets, and the equalization of the workforce have all been cited as reasons for the spike in prenuptial agreements among millennial couples.

Here are the biggest reasons why more millennials are interested in getting prenups than ever before.

When it comes tomillennials’ views on marriage, perhaps Kanye West said it best — “we wantprenup.”

According to a recentstudy conducted by the American Academy of Matrimonial Lawyers (AAML),62% of divorce attorneys surveyed reported an increase in the total number ofclients requesting prenuptial agreements in recent years. Among those attorneyswho reported an increase, 51% said there was an increase in the number ofmillennial clients signing prenups.

Jacqueline Itani, anAssociate at Stutman Advocate Stutman & Lichtenstein, LLP witha strong background in Matrimonial law and Family and Divorce Mediation, spoketo Business Insider about why young people are interested in signing prenuptialagreements and protecting themselves in the event of a divorce.

Here are the biggestreasons why more millennials are interested in getting prenups than ever before.

Millennials want to protect their assets

Millennials are less interested in buying houses but areincreasingly interested in the stock market. Cavan Images/Getty

Although, fewer millennials on average own houses than in previousgenerations, millennial couples may still have significant assetsthey want to protect going into a marriage.

The Pew Research Center argues thatmillennials may be more cautious about protecting their finances upon gettingmarried due to the turbulent economy millennials experienced when they enteredthe workforce in 2008.

Jacqueline Itani alsoargues that millennials worry about a potential divorce affecting their futurefinancial situation and want to protect themselves in case a divorce doeshappen.

Itani explains that whilemillennials may not have as many “hard” assets compared to when babyboomers and Gen X-ers were young, they are increasingly interested in investingin the stock market and startup businesses.

According to an article bythe New York Post, nearly 7 in 10 millennials areinvesting financially in something.

“With the techindustry rising, more people are coming into the marriage with stock optionsand fewer concrete assets as we’ve seen in the past. The value of these assetsis a little more uncertain until these companies do or don’t go public. Bythen, the marriage is well underway,” she says. “People feel that theywould be more protected by entering into a prenup.”

Millennials are getting married later in life and mayhave more assets going into marriage than past generations

Dayna Murphy (L) and Shannon St. Germain pose on theirwedding day.REUTERS/Mark Blinch

Itani explains thatanother factor leading to an increase in prenuptial agreements among youngpeople is that millennials are getting married later in life than members ofpast generations.

Unlike baby boomers or GenX-ers who married in their early twenties, millennials are choosing to waituntil their late 20s or early 30s to tie the knot. According to a previous article by Business Insider, in 1962,90% of 30-year-olds had been married at least once. In 2018, only 54% of30-year-olds had been married.

“Millennials arewaiting a longer time [than past generations] to get married and focusing moreand more on their professional careers,” Itani explained. “In thatsense, they have more assets to protect when they do get married.”

Millennials don’t just want to protect their currentassets — they also want to safeguard assets they may acquire later on in life

Millennials want to protect family gifts andinheritance. Hero Images/Getty Images

Itani explains that whilea prenup can certainly help guard and protect the assets couples have goinginto a marriage, it can also protect assets that individuals might acquire downthe line, or secure their financial situation in the case of a future divorce.

“A majority of theprenups that you see are from people who come into the marriage with assets orhave assets they expect to receive — whether that be an inheritance from theirfamily or gifts that they want to protect,” says Itani.

As much as prenups can beabout protecting what you have now, they can also protect what you will havedown the line.

“If one client ismaking a significant income compared to their partner, they may also want aprenup to protect themselves from future support or alimony payments,”Itani explains.

Millennials don’t see prenups as taboo

Prenups aren’t seen as taboo, but financiallysmart. fizkes/Shutterstock

Prenuptial agreements havebeen considered taboo in the past, but millennialsare changing that reputation. Prenups were previously seen as only intended forwealthy people, and even had a reputation of leading to divorce — this hasbeen disproven by studies.

“People are becomingmore knowledgeable about prenuptial agreements,” she says. “Millennialsare concentrating more on building their career and becoming more knowledgeableabout what assets will come of their career, and what their income will be inthe future. Millennials feel it’s necessary to protect those assets.”

More women are interested in prenuptial agreements

Women have more assets entering into marriages thanprevious generations. Vera Kandybovich/Shutterstock

The rise of women in theworkforce may also be affecting the rise in prenuptial agreements.

According to a reportby The Ladders, women are increasingly becominginterested in signing prenuptial agreements. Pew Research Center reports that 72% ofmillennial women are employed and, according to a separate AAML study, 45% of attorneys surveyedsaid more women are responsible for paying alimony after getting a divorce thanin previous years.

As more women begin toacquire their own assets and gain financial leverage, there is an increasedinterest for them to sign a prenuptial agreement prior to getting married.

“Nowadays, with theequalization in the workforce, both spouses are working and becomingprofessionals,” Itani explains. “They both benefit from signing aprenuptial agreement.”

6.Number of Refugees +70% in 10 Years.

GlobalTrends At-a-Glance

Bythe end of 2018, 70.8 million individualswere forcibly displacedworldwide as a result of persecution,conflict, violence or human rights violations. That was an increase of 2.3million people over the previous year, and the world’s forcibly displacedpopulation remained at a record high. This includes:

  • 25.9 million refugees in the world—the highestever seen;

  • 41.3 million internally displaced people; and

  • 3.5 million asylum-seekers.

New displacement remains very high. Oneperson becomes displaced every 2 seconds – less than the time it takes toread this sentence. That’s 30 people who are newly displaced every minute.

1 in every 108 people globally is either anasylum-seeker, internally displaced or a refugee.

7.Another Look of U.S. 65+ Demographics….94 Million by 2060

8.Working Full Time Past 65

John Burns Real Estate

9.1/3 Of Households Over 55 Have No Retirement Savings.

Hedge fundtitan Ray Dalio published a sobering essay lastFriday about the state of capitalism in the U.S. He observed, correctly in myview, that “the ability to make money, save it, and put it into capital (i.e.,capitalism) is an effective motivator of people and allocator of resources thatraises people’s living standards.”

But Dalio thenwent on to present myriad data showing that many Americans make too littlemoney to live on, let alone save, with harmful consequences. He counts amongthem diminished health, education and economic mobility, high rates ofincarceration, and widening wealth and income disparity that raise the risk ofsocial unrest. In an interview with 60 Minutes on Sunday, he called it “anational emergency.”

Employers Can Buy Retirement Security for $2.64 an Hour

Many Americans can’tafford to save for their future and will be doomed to poverty.

10.How This Ancient Philosophy Can Help Your Investing

Originally posted August 29, 2019 on Liberty ThroughWealth

  • Although Stoicism dates back to 300 B.C., it still resonateswith many world leaders and prominent entrepreneurs.

  • Today, Nicholas Vardy explains how it can influence yourinvestment strategies as well.

When mostinvestors hear the word “philosophy,” their eyes glaze over.

Afterall, it likely reminds them of a boring professor lecturing them about theobscure ideology of a long-dead thinker.

Butphilosophy isn’t just about asking how many angels can dance on the head of apin.

It’s alsoabout what men and women of action used to address their challenges – andachieve their greatest triumphs.

And thereis no more practical philosophy than Stoicism – an “operating system” that hasenjoyed a remarkable resurgence in high-tech centers like Silicon Valley.

As HenryDavid Thoreau put it, “To be a philosopher is not merely to have subtlethoughts, nor even to found a school… It is to solve some of the problems oflife, not only theoretically, but practically.”

And as myrecent rereading of Stoic philosophy confirms, you can apply the lessons ofthis practical philosophy to your investing as well.

Let meexplain…

TheFundamental Insight of Stoicism

Stoicismwas founded in Athens, Greece, by Zeno of Citium in the early third centuryB.C.

At thevery core of Stoicism stands this fundamental belief: Control what youcan… and accept what you can’t.

The StoicEpictetus put it this way… “In life our first job is this, to divide anddistinguish things into two categories: externals I cannot control, but thechoices I make with regard to them I do control.”

We cannotcontrol or rely on external events. We can control only ourselves and ourresponses.

Stoicismin History

Incontrast to the popular image of philosophers, Stoics were mostly men ofaction.

MarcusAurelius was a Roman emperor – running one of the most powerful empires in thehistory of the world. Cato famously defended the Roman republic with Stoicbravery until his defiant death. Even Epictetus, a lecturer, was born and livedas a slave.

Stoicismalso exerted its influence on some of history’s later great thinkers.

AdamSmith’s The Wealth of Nations was influenced by Stoicism – helearned under a teacher who had translated Marcus Aurelius’ works.

JohnStuart Mill wrote of Stoicism and Marcus Aurelius in his famous treatise OnLiberty, calling it “the highest ethical product of the ancient mind.”

U.S.presidents have been more inspired by Stoicism than most.

GeorgeWashington viewed himself as a Stoic from the age of 17. The future firstpresident even put on a play about Cato to inspire his men at Valley Forge.

ThomasJefferson had a copy of Seneca’s work on his nightstand when he died.

TheodoreRoosevelt spent eight months after his presidency exploring the unknown junglesof the Amazon. He brought copies of Marcus Aurelius’ Meditations andEpictetus’ Enchiridion with him.

BillClinton rereads Marcus Aurelius every single year.

Perhapseven President Trump could use a dose of Stoic philosophy in his negotiationswith China.

Afterall, Wen Jiabao, the former prime minister of China, says that Meditations isone of two books he always took with him on his travels. He claims to have readMarcus Aurelius’ work more than 100 times throughout his life.

Stoicismand Investing

So howcan Stoicism inform your investing? In a lot more ways than you think, as itturns out.

Here arebut three of them…

No. 1:Understand That Investing Is Full of Challenges

MarcusAurelius starts his Meditations with the following…

Begineach day by telling yourself: Today I shall be meeting with interference,ingratitude, insolence, disloyalty, ill-will, and selfishness – all of them dueto the offenders’ ignorance of what is good or evil. But… none of those thingscan injure me, for nobody can implicate me in what is degrading.

Stoicismteaches you that the world is full of challenges, but it’s how you deal withthose challenges that matters.

You cansay the same of investing.

Say youhave a position that is going against you. It takes mental fortitude to stickto that position – or to cut your losses if it goes too far the wrong way.

A stockdoes not care whether you own it or not. So whatever mental battle you arefighting is all in your mind. And it’s a constant battle that you must acceptas part of the process.

No. 2:Accept the Outcome

Investing,like life, is never perfect. You win some. You lose some.

EvenWarren Buffett and Charlie Munger have confessed to making more mistakes thanthey can count.

You willhave investments that perform spectacularly. Others will fizzle.

But ininvesting, as in life, you don’t strike out. Just make sure you keep swinging –a little smarter every year. Focus on the process – not the outcome. Yourobjective is to stay in the game.

As theStoics put it… Amor fati – love your fate.

No. 3:Develop Your Personal Investment Philosophy

Stoicismprovides a practical philosophy for living your life. A personal investmentphilosophy will do the same for you in your financial life.

Wheninvesting, you’ll hear a lot of contradictory advice. Act on what makes sensefor you. And ignore the advice that doesn’t.

All thistakes discipline. Every. Single. Day.

Goodinvesting,

Nicholas

Interestedin hearing more from Nicholas? Follow @NickVardy onTwitter.

A widelyrecognized expert on the exploding asset class of exchange-traded funds (ETFs),Nicholas has been a regular commentator on CNN International and Fox BusinessNetwork. He has also been cited in The Wall Street Journal, FinancialTimes, Newsweek, Fox Business News, CBS, MarketWatch, YahooFinance and MSN Money Central. Nicholas holds a bachelor’s and master’s degreefrom Stanford University and a J.D. from Harvard Law School. It’s no wonder hisgroundbreaking ETF content is published regularly in the free dailye-letter Liberty Through Wealth.