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Higgins Capital Management, Inc.

Where are you?

The Economy: Santa or The Grinch? Depends where you are and what you're focused on. US economic numbers remain strong with some softening at the periphery. Global numbers are less robust with China slowing, Brexit stumbling, France rioting and Russia threatening. The Fed has been pounded into discovering that interest rates are at neutral. Oil has been pounded 33% into discovering a new price at $50/barrel. Gold, fixed income and real estate have likewise seen declines. Yet surveys of consumer and business confidence remain strong. From sales projections to profit expectations to staffing needs, businesses are seeing good times ahead. Increased deficit spending, tax cuts and profit repatriation have all contributed to good numbers and the sense that the upswing will continue.  This begs the question, "Which comes first, a business slowdown or a bear market in stocks?" The record shows that sometime it's one; sometimes it's the other. The drumbeat of falling sales, profitability and layoffs can quickly change consumer sentiment. A stock market crash can have the same affect even more quickly. With Boomers retiring in record numbers, rest assured that this demographic will continue to impact the economy as it has since 1946. Boomers needing to monetize their home equity should result in an eventual selloff in residential real estate. Boomers needing to restructure retirement accounts out of stocks should have a similar affect on the stock market. But, of course, that's assuming rational cause and affect markets … and the one thing we've all learned in the past decade is that assuming anything rational could be fatal. Instead, Be Nimble Be Quick.

Food for Thought: On the glide path to year end; the time of year when investors are reviewing performance and asking, "How have I done this year?" We say that a better question is, "How much is enough?" If you're retired or within 10-years of retirement we challenge you to answer this question, "Why am I still in this market?" You've had a decade in which many portfolios have doubled or tripled in value. If you've missed out, as many investors have, now is not the time to try to make up. Remember, Babe Ruth was both the Home Run King and was equally famous for his strike-outs. Rest assured that you will have another chance. Right now, volatility is back; back to normal. 5%, 500 point daily swings on the indices are frequent. Again, if you are retired or within 10-years of retirement, why are you subjecting your net worth to this late stage market risk. You should be playing the long-game and realizing that this chapter is over. Now more than ever it behooves you to approach these times with cautious objectivity. There may yet be a year-end rally but this market is old and spent. It's staggering along before rolling over. There are sound strategies for capital preservation, protecting your nest-egg and providing you with secure lifetime income. Contact us to learn more.