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The Best of What They Said and I Read Week Ending 8/19/18

Short excerpts from articles I found interesting.  I may not agree with the author and the following material is not intended as investment advice.

Kiplinger’s Retirement Report – August, 2018 – Sorting Through Financial Alphabet Soup

“What’s the difference between FDIC and SIPC?”

“The Federal Deposit Insurance Corp.  (FDIC) protects deposit accounts from bank failures, covering up to $250,000 in individual accounts at each bank, up to $250,000 for each person’s share of joint accounts and up to $250,000 for IRAs and other retirement accounts at each bank.  See www.fdic.gov.”

“The Securities Investor Protection Corp. (SIPC) protects brokerage accounts.  Brokerage firms are required to keep customer’s investments separate from the firm’s own funds, but if the firm fails and customer assets are missing, then SIPC replaces cash and securities such as stocks and bonds.  SIPC returns your share of the broker’s remaining assets, then uses its own funds (up to $500,000 per account, including a $250,000 limit on cash) to buy the shares on the market.  See www.sipc.org.”

Barron’s  – August 16, 2018 – The Bull Market Rumbles On Despite Turkey Turmoil – by Ben Levisohn

“A week that began with concerns about Turkey—and the possibility of contagion—ended with the S&P 500 less than 1% away from a new all-time high.  The Dow Jones Industrial Average gained 356.18 points, or 1.4%, to 25,669.32 this past week, while the S&P 500 rose 0.6%, to 2850.13, just 0.8% away from its Jan. 26 record. The Nasdaq Composite slipped 0.3%, to 7816.33.”

“…The S&P 500’s rally since its March 2009 low has lasted 3,448 calendar days, and on Aug. 22, it will hit 3,453, besting what some refer to as “the bull market lasting from 1990 to 2000.”  There’s only one problem: There was no bear market in 1990, at least if we’re sticklers for definitions—and that means the bull didn’t start then.  The S&P 500 dropped 19.9% from July 16, 1990, through Oct. 11, 1990, close to the 20% drop that defines a bear, but only if we round up. There have been other near misses, according to Bespoke Investment Group data. In 2011, the S&P 500 dropped 19.4%—and more than 20% on an intraday basis. In 1998, during the Asian Contagion, the benchmark fell 19.3%, and it dropped 19.4% in 1976. “You have to be consistent,” says Bespoke Investment Group’s Paul Hickey.”

“If 1990 wasn’t a bear market, then the bull market began in December 1987 and didn’t end until the dot-com peak in March 2000, a whopping 4,494 days later. In that case, we still have a ways to go. "

“…That’s why it’s important to focus not on the length of the bull market, but on the length of the economic expansion instead, says Ed Yardeni, chief investment strategist at Yardeni Research.  “All I’m interested in is how long the expansion lasts,” Yardeni says. “Because the longer it lasts, the longer the bull market lasts.” This economic expansion will become the longest on record in July 2019.  If anything, the obsession about the length of the bull says more about investor psychology than about the market. This bull has been described as the most hated one in history, and investors have found reason after reason not to buy in, even as the S&P 500 has quadrupled. It’s not too difficult to see the same dynamic in play. “Lurking behind the argument that this is about to be the longest bull is a bearish notion that it could drop dead at any time,” Yardeni says.  And that’s just bull.”

The Economist – August 11, 2018 – Leaders - The World This week - Politics

“China decided not to allow cinemas to show Disney’s new Winnie the Pooh film, “Christopher Robin.”  No reason was given.  On Chinese social media Xi Jinping has been relentlessly (if gently) mocked for his resemblance to the portly bear.  Jokers swap pictures of Pooh and his pals for images of Mr. Xi with foreign leaders.  Censors insist that it is not funny how bear likes honey, no matter how much buzz, buzz, buzz it generates.”

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