Strategies for a Secure Future Retirement WatchBOB CARLSON’S · small business, real estate or some special investments. Personal letter. This document typically is directed at

Retirement WatchBOB CARLSON’S Strategies for a Secure Future

Vol. 30, Issue 6 June 2019

Dear Reader:To make better financial decisions, learn

from those who demonstrated they’re very good at making financial decisions and the success is likely to continue.

First, look for successful people and firms. Then, and more importantly, evalu-ate whether the success is repeatable.

For success and good decision making to be repeatable, there has to be a process.

Consider Bridgewater Associates, the largest, and, by most measures, the most successful hedge fund firm. Its founder, Ray Dalio, learned early in his professional life that ad hoc decisions, or those based on “gut feelings,” sometimes are good but at other times can be very big mistakes.

As a result, Bridgewater systemizes ev-erything. An issue is rigorously researched. The results of the research are codified into checklists, algorithms and computer programs. Decisions apparently are made more by the system than by people. There’s also a process of constant review and up-dating of the system.

People and firms who don’t have a process for making decisions can be per-suaded by the wrong factors. Emotions and market noise, largely influenced by media reports, become their main deci-sion making tools.

Too many people begin by asking, “What should I do?” The first question should be, “How do I analyze this issue?”

After making a decision, it’s often best to record the reasoning. It doesn’t have to be long. Write the factors reviewed and the pros and cons of the decision. Then, write which factors persuaded you to make the decision you did. If appropriate, record any events that would cause you to change or re-evaluate the decision.

This is a good process for all your fi-nancial decisions. It takes some humility, but you’ll make better decisions using a slow, thoughtful process instead of mak-ing the quick, instinct-based decisions most people rely on.

7 Essential Estate Planning Documents & Strategies

You can save your loved ones months or years of time, frustration and anguish. All

you have to do is make sure your estate plan has all the essential documents and that key people know where to locate them.

As I’ve said before, estate plan-ning is about much more than tax

reduction. A complete estate plan allows your assets to be transferred quickly and efficiently to the next owners. It also ensures your comfort, care and financial security for the

rest of your life. You’re likely to have additional priorities, but those are the main goals that apply to every estate plan.

To accomplish these goals, you need to have key documents in good order. The documents also need to be organized and in a location your executor and key family members know.

Otherwise, your loved ones will

(Continued on page 2)

How Conflicted Is Your IRA Advisor? . . . . . . . . . . . . . . . . . .3

An Answer To Today’s Long-Term Care Crisis . . . . . . . . . .5

Tax Secrets of Mutual Funds . . . . . . . . . . . . . . . . . . . . . . . . . . .7

In This Issue

To accomplish these goals, you need to have key documents in good

order.

Why the Fed and the Markets Are in Conflict . . . . . . . . . .10

Handle Rising Volatility & Uncertainty in the Markets . . . .11

Planning for Life . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16

Actions to Create the Retirement You DesireJune 2019 2

join the ranks of the millions with dreadful, distressing stories of deal-ing with their parents’ estates. They tell about the weeks, months, or lon-ger spent rummaging through files, boxes and other containers of pa-pers looking for the key documents. Sometimes the searches ultimately are successful. Other times, business-es and government agencies need to be contacted (and often paid) to pro-duce copies of needed documents. It is not unusual for loved ones to always wonder if there are assets and benefits they didn’t find.

Avoid putting your family through that experience. Compile and or-ganize the key documents your heirs will need, and let them know where the documents are located. You know there should be a will and probably a revocable living trust, so I’m not going to include those in this list of essential documents.

Digital asset information. I used to put this item farther down the list, but its importance has increased greatly for most people. It is so im-portant that I’ll have a longer discus-sion in an upcoming issue.

Compile a master list of all your online accounts, subscriptions, bill payments and similar items. Your executor needs passwords and other information to manage your financial accounts, cancel automatic bill pay-ments and subscriptions, and access email and social media accounts. You

might have other digital assets and ac-counts the executor or family members should know about.

In addition, your will should explicitly give your executor or someone else the right to access and use the digital assets and accounts. Ownership of these items also should be bequeathed to specific people in your will.

Inventory. The first step an execu-tor takes is to prepare an inventory of everything you own and owe. Don’t make it hard for him or her. Prepare an inventory and update it annually.

Life insurance and annuities probably are the most common lost

assets. The executor needs to know details of all your life insurance cov-erage, including employer and union benefits, veteran’s coverage and any others you have.

Retirement accounts and bene-fits also can be overlooked, because these assets and benefits aren’t trans-ferred through your will. The current beneficiary designation forms and details about the accounts and bene-fits need to be part of the inventory.

To make compiling the inventory easier for both you and the executor, use my workbook, To My Heirs: A Book of Final Wishes and Instructions. To learn more, on www.retirementwatch.com, click on “About Bob Carlson” and then click on “Bob’s Library.”

Proof of ownership. Once the executor knows what you own, they have to be able to prove it. Most peo-ple don’t give these basic documents much thought. The documents aren’t in places that are obvious to some-one else. Locating these documents often is one of the major problems for surviving loved ones. Too often, the documents aren’t found. That’s why each state has an online list of unclaimed property and benefits.

You need to assemble deeds and leases to real estate, title and regis-trations to vehicles, and financial account statements. If you own in-dividual stocks and bonds, keep the documentation organized. Be sure

Bob Carlson’s Retirement Watch™ (ISSN 1077-3924) is edited by Robert C. Carlson and published monthly by Eagle Products, L.L.C., 300 New Jersey Ave, NW, Suite 500, Washington, D.C. 20001, Customer service: 800-552-1152. E-mail: [email protected]. Website: www.RetirementWatch.com. Subscription cost is $99 annually. Copyright 2019 by Eagle Products, L.L.C. POSTMASTER: Please send address changes to Bob Carlson’s Retirement Watch, Subscriber Services Department, P..O. Box 1901, Williamsport, PA 17701. Postage paid at periodical rates at Centreville, VA and additional mailing offices. The information in this newsletter is from sources believed reliable, but no guarantee or warranty is made as to its accuracy. The editor, owners, and publisher, as well as their clients, employees, associates and/or family may have positions in securities and instruments recommended or reviewed in this newsletter. The editor and publisher assume no liability for the reader’s use of the information contained herein. Letters and e-mail from readers are encouraged. Editor: Robert C. Carlson; Editorial Director: Paul Dykewicz; Group Publisher: Roger Michalski.

Your executor needs passwords and other

information to manage your financial accounts,

cancel automatic bill payments and subscriptions, and

access email and social media accounts.

Locating these documents often is one of the major problems

for surviving loved ones. Too often, the

documents aren’t found.

www.RetirementWatch.com June 2019 3

the executor knows where to find the proof of ownership.

When you own a business, its organizational and operating papers need to be kept up to date and in good order.

The executor also might need proof of debt payments. Proof that you paid a mortgage, car loan, or other significant debt should be included with ownership documents.

Powers of attorney. At a mini-mum, you need two powers of attor-ney (POAs) designating one or more agents to act on your behalf when you can’t represent yourself.

One POA should cover your finan-cial affairs. Another POA, also known as an advance medical directive, enables one or more people to make medical decisions on your behalf.

We discussed these documents in past issues of Retirement Watch and will discuss them again in the future. You can find the past articles in the Archive on the members’ section of www.retirementwatch.com.

Personal documents. Many people are surprised by the information and proof that’s required to process an es-tate, transfer benefits and take other actions.

Your executor is likely to need your birth certificate and passport. A marriage license and any divorce

documents also should be readily available, as should your Social Se-curity and Medicare information. If you served in the military, documen-tation of that is important.

Copies of your income tax returns are helpful in preparing your final in-come tax returns and also in providing assurance that key sources of income and investment assets were located.

If you rent safe deposit or post office boxes, the executor needs all the details.

Letter of instructions. The letter often is a guide to the documents already discussed, plus additional information the executor and loved ones need to know. It has no legal effect but provides great help to your loved ones.

The letter, of course, makes clear where all the essential documents are located and how to access them. It also should provide valuable contact information, such as your attorney,

accountant, financial services firms and any other sources you think might be helpful.

Some letters go further by provid-ing advice and recommendations on how to manage, sell or otherwise dispose of key assets. This might be important if you have a collection, small business, real estate or some special investments.

Personal letter. This document typically is directed at family members rather than the executor and doesn’t concern finances. You can leave a guide to your preferences and ideas for a funeral or memorial service as well as burial or cremation instructions. You also can draft an obituary and state where you’d like it published.

Some people go a step further and write what’s often known as a “family love letter.” The letter might provide a personal or family biography, express their affection and wishes for family members or impart some wisdom or lessons learned over the years.

More information about the essential estate planning documents and strategies is available in the March 2018 edition of my Spotlight Series of online seminars. Learn more about the Spotlight Series by calling 800-552-1152 or clicking the Retirement Watch Spotlight Series link at www.retirementwatch.com.

How Conflicted Is Your IRA Advisor?

Government regulators believe that many financial advisors give

bad advice about IRAs because the advisors have inherent conflicts.

The main concern of regulators was what happens to an individual’s 401(k) account after leaving a job. The

regulators concluded that too many advisors recommended that the 401(k) account be rolled over to an IRA, but that IRA wasn’t a better deal for the individual.

Many people are surprised by the information and

proof that’s required to process an estate, transfer benefits and

take other actions.


The belief led the Department of Labor to issue an extensive set of regulations, known as the fiduciary rule, requiring financial advisors to document why a rollover was recom-mended. Advisors were required to consider a number of factors in the recommendation.

Early in 2018, a federal appeals court ruled that the regulations weren’t valid. The Securities and Exchange Commis-sion responded by issuing proposed regulations that aren’t as stringent as the fiduciary rule but appear to put a greater burden on advisors than current rules. The Financial Industry Regulato-ry Authority also issued guidelines for brokers to follow when making recom-mendations on rollovers. A number of states now have issued or are working on their own versions of the fiduciary rule covering rollovers to IRAs.

Most of the discussion centers on whether brokers and insurance agents have lower fiduciary standards than registered investment advisors and other financial advisors. Under current law, they apparently do.

I think you should ignore the regula-tions and noise regarding the rules.

Generally, it’s a good idea to assume that your financial advisor has some kind of conflict. Brokers, insurance agents, and some other financial advi-sors often receive their income from commissions, so they benefit from hav-ing you roll over money to an IRA and make new purchases of investments or insurance products.

But other investment advisors usually are paid a percentage of the value of the investment assets they manage.

Typically, they can’t manage assets in an employer’s 401(k) plan, so these advi-sors have an incentive to recommend the account be rolled over to an IRA that they can control.

Probably the only financial advisors who don’t have a conflict are those who charge either an hourly rate or a fixed annual fee. They receive the same income regardless of what they recom-mend.

When you’re leaving an employer, take your time to decide what to do with the 401(k) account. First, ask the employer you’re leaving if there are limits to how long you can leave the money in the 401(k). Most allow former employees to leave their ac-counts indefinitely. Some put a time limit on how long they’ll hold a former employee’s account, and some limit the services and options available to former employees.

Generally, there is no reason to make a rushed decision.

Whether you’re working with a financial advisor or not, take the time to

address these issues to decide the best option for you.

Will you have a new employer? If you’re not retiring, consider your new employer’s 401(k) as an option. Most plans allow employees to roll over balances from other 401(k) plans and IRAs into the new plan. This could be a way to consolidate assets and also reduce costs.

Fees. What are the fees charged by the 401(k)? First, compare the expense fees charged by the mutual funds offered in the 401(k) and in the IRA you are con-sidering. Often, funds in 401(k) plans have lower annual fees than mutual funds you can own through an IRA.

Be sure to consider all fees and expenses. Often there are charges for transactions, such as distributions. Compare the current fees at both the 401(k) and IRA.

Ask about the fees your financial advisor will charge. This is the area on which the fiduciary rule focused. You need to know about any commissions or other amounts that will be deducted from your money in an IRA rollover. If your advisor will charge a continuing annual fee to manage the IRA rollover, that’s probably an additional fee you aren’t paying through the 401(k).

A 401(k) plan usually has an annual account maintenance or recordkeeping fee. Sometimes this is paid by the em-ployer. Sometimes it is deducted from participants’ accounts. Learn the details about this fee.

When it’s all sorted out, an IRA is likely to have higher fees than a 401(k), before considering any commissions or financial advisor fees. If that’s the case

Generally, it’s a good idea to assume that your

financial advisor has some kind of conflict.

When you’re leaving an employer, take your

time to decide what to do with the 401(k)

account.


for you, decide if the additional costs of the IRA are worthwhile. The issues discussed below should help with that evaluation.

Advice and other services. A fi-nancial advisor probably will provide investment management advice or services as part of the fees. Most 401(k) plans provide computer-assisted advice or no investment advice at all.

A financial advisor also might bundle the investment management services with broader financial planning. The planning services might not be available through the 401(k) or might not be personal and customized. Determine if these services are important to you and worth the cost.

Investment options. A 401(k) plan usually has a relatively small number of investment options. An IRA at a broker or mutual fund firm is likely to have far more investment options. The question is how many of those options you’re likely to use and if they are worth any additional cost of being in the IRA instead of the 401(k).

While 401(k) investment options are limited, they usually are carefully selected, especially at larger employers. You’re likely to be able to invest in at least one fund representing each of the

major asset classes and perhaps other classes. The funds usually are selected because they are among the top per-formers in the asset class and have low fees. A 401(k) plan might offer options not available through IRAs, such as a stable value or guaranteed interest fund. The 401(k) also is likely to offer target date funds or similar options.

Decide how you’re likely to invest in retirement and if the 401(k) meets your needs.

Special assets. The Department of Labor’s fiduciary rule was believed to partly target insurance agents who con-vince retiring employees to move their 401(k)s into IRAs to buy high-com-mission, high-expense annuities. If you’re interested in annuities generally and can’t buy them through the 401(k), that’s a reason to roll over your 401(k) to an IRA.

But you shouldn’t decide to roll over the 401(k) because someone made a

presentation about a particular annuity and it looked attractive. You need to compare different annuities as part of your retirement planning. First, decide if an annuity should be part of your retirement portfolio. Then, decide on the annuity to buy after doing a com-prehensive search.

Investment changes. How often can you make changes in your account? Some 401(k) plans limit the frequency of changes and might limit changes in some funds to certain time periods, such as the end of the month. Most IRA investments can be changed daily or more frequently. Decide if any differ-ence between the two is important to you.

Those are the key factors to consider when deciding what to do with your 401(k) account when leaving your em-ployer. Evaluate them carefully. A good, objective financial advisor will help and provide a comprehensive comparison of the options. If an advisor won’t help with such an evaluation, that should be a red flag to you.

Once you have reached a decision, write down the reasons why it is the best choice for you and the factors you considered.

An Answer To Today’s Long-Term Care Crisis

My favorite long-term care protection plan is improved and attractive to more people

than before.

You have more options than ever to help pay for future long-term care, and these newer options are significantly more appealing and rewarding than traditional long-term care insurance.

I’ve covered in the past the many troubles in traditional long-term care insurance

(LTCI). Most insurers exited the market. Many of the remaining insurers continue to raise premiums on existing policyholders.

In Virginia, for example, 29 different insurers are seeking premium increases averaging 50% or more for the coming year. Premium increases would more than

PORTFOLIO

While 401(k) investment options are limited, they

usually are carefully selected, especially at

larger employers.


double on average on a dozen sets of poli-cies, according to reviews of filings with the state insurance commission reviewed by The Virginian-Pilot. The situation is similar nationwide, and these premium increases are on top of other substantial increases in recent years.

To be sure, a few LTCI carriers have had no or modest increases over the years, but these are exceptions.

Traditional LTCI issuers say their new policies are different and unlikely to incur the steep premium increases existing policyholders have seen. Understandably, many people are skeptical and prefer another way to plan for any long-term care (LTC) needs they have. Few of us can pay for LTC out of our assets if we need it, so we seek some kind of insurance.

An increasingly popular option is known generically as the Asset-Based or Leveraged Care LTC plan.

These plans have three distinct advan-tages over traditional LTCI.

• This isn’t use-it-or-lose-it coverage. With traditional LTCI, you pay premi-ums for years, usually decades. If you don’t need LTC or only need a small amount during your lifetime, the only benefit you receive is peace of mind from knowing the policy was there if required. There’s no cash value account

or refund of any of your premiums. With the Leveraged Care options, you or your beneficiaries always get your premium back in benefits or a return of that premium.

• Your cost is locked in for the life of the policy.

• Your savings are leveraged. The amount you have available to pay for LTC usually is three to 10 times your premiums.

There are many variations of As-set-Based or Leveraged LTC plans. The one I really like is known as the Return of Pre-mium Long-Term Care plan or ROP LTC. The foundation is a universal life insurance policy with a long-term care benefit. Your amount of LTC coverage is determined by your age, the amount you deposit, how long you own the policy before you claim LTC benefits and a couple of other factors.

You choose your level of inflation pro-tection from 0%, 3%, or 5%, and at either a simple rate or compound rate. The 5% compound inflation rate provides you the most protection but also decreases your initial coverage the most.

You also select the number of months over which benefits will be paid when needed, up to 84 months. Most peo-ple select 72 months. The number of months selected influences the amount

of each monthly payment.There’s no medical exam. You answer

some questions about your medical history and take a cognitive impairment test, which all can be done over the telephone.

You or your beneficiaries, at a minimum, receive all the premiums you paid in the form of benefit claims, a refund or a death benefit on the policy. The death benefit could exceed the premiums you paid. You can receive a refund of 100% of your pre-miums by canceling the policy no sooner than five years after owning the policy or at the end of your funding period.

Most asset-based plans require premi-ums to be deposited in a lump sum, usu-ally of $50,000 or more. For a number of reasons, many people can’t or don’t want to make that one big payment. The ROP LTC plan allows you to make deposits over a period of one, five, seven, 10 or 15 years. You only need to deposit enough to produce at least a $50,000 life insur-ance benefit. The amount will depend on your age and other factors.

Periodic payments give you less coverage for the dollar than a lump sum premium does. But the initial coverage amount takes effect immediately and increases with your selected inflation rate.

Another advantage is that the ROP LTC is an indemnity policy.

Traditional LTCI vs. Return of Premium Long-Term Care Plan

Policy TypeAnnual

PremiumYear

Total Deposit

Beneficiary Benefit

Return of Premium

Duration of Care

Monthly Benefit

Total Care Amount

Traditional LTCI $8,842 for life

10 $82,420

$0 $0 48 months

$7,328 $351,841

15 $132,630 $11,936 $449,048

20 $176,840 $19,444 $933,537

ROP LTC$12,000 for 10 years

10$120,000 after 10 years

$120,000 $120,000 72 months

$4,718 $385,072

15 $7,685 $627,242

20 $12,517 $1,021,712


There are two broad types of LTCI policies. Most traditional LTCI policies and some asset-based policies are reimburse-ment policies. Once coverage is triggered, you have to incur the LTC expenses and submit proof of them to the insurer for reim-bursement. You wait to receive your check. There also are likely to be questions about whether particular expenses are covered by the policy.

In an indemnity policy, you qualify for a monthly benefit amount. When coverage is triggered, you receive the monthly amount. With the ROP LTC policy, you pay for the first 90 days of coverage, and then the monthly benefits begin.

You can use the monthly benefits however you want. You can pay friends or relatives to provide your care at home. Or you can have professional home care. You also can go to an assisted living facility or a nursing home. If the cost of your care is less than the monthly benefit, you can save the

excess or use it to pay for other expenses.As with other LTCI policies, your benefit

is triggered when a doctor certifies that you need help with at least two of the six activities of daily living or have cognitive impairment. You don’t have to enter a nurs-ing home or have a previous hospital stay.

The LTC benefits are tax free. The table compares the ROP LTC plan

to traditional LTCI for a male age 65 who selects 5% compound inflation protection and a 90-day waiting period on each pol-icy. The cost of the ROP LTC is guaran-teed not to increase while premiums on traditional LTCI can increase.

This specific ROP LTC policy is

available to people ages 40 to 75, while other plans are available up to age 80.

The policy is ideal for people who have money in safe, low-yielding investments held primarily for future LTC or other emergencies. By repositioning some of the money in the ROP LTC policy, you immediately leverage those funds. The policy increases the amount of money available for LTC by a minimum of three times your premium and up to 10 times, depending on the inflation rider.

I was alerted to ROP LTC by David and Todd Phillips of Phillips Financial Services, my go-to sources for the best in life insurance, LTCI and annuities. They have a digital report with more details, The Return of Premium LTC, that they are offering to my subscribers at no cost.

For more information about this and other LTCI options, contact them at 1-888-892-1102 or https://ltc.epmez.com/ropltc1/.

Tax Secrets of Mutual Funds

Many mutual fund investors focus on the fees they pay but don’t pay enough attention to the

taxes on their investment returns.Taxes are a greater drag on net

investment returns than expenses and fees, according to a study by Rob Arnott of Research Affiliates. Most investors leave a lot of money on the table by overlooking important tax tricks of funds and focusing on taxes only near the end of the year.

Don’t let that happen to you. Review these simple rules about mutual fund

taxes and keep them in mind all year. As markets change, consider tax-wise actions to take with your funds.

You want to own the right assets in the right accounts when possible. Owning the right investments for you comes first. To the extent you can, own the assets in the most tax efficient accounts for them.

If most of your money is in an IRA

or 401(k), you might not be able to have all the right assets in the right ac-counts. That’s one reason I recommend tax diversification. It’s a good idea to have taxable accounts, tax-deferred accounts and tax-free accounts.

A good general rule for putting the right assets in the right accounts is to hold assets that already receive tax advantages in taxable accounts. Stocks, mutual funds and other assets you’ll hold for more than a year should be in taxable accounts to take advantage of long-term capital gains. Stocks that pay qualified dividends usually should be in taxable accounts.

Tax-deferred accounts should hold

Few of us can pay for LTC out of our assets if we

need it, so we seek some kind of insurance.

Taxes are a greater drag on net investment returns than expenses

and fees


assets that earn short-term capital gains and taxable interest. Tax-free ac-counts, such as Roth IRAs, also should own these types of assets.

Real estate investment trusts (RE-ITs) are a hybrid but generally should be held in tax-deferred or tax-free accounts. You might want to hold trea-sury bonds or treasury-only mutual funds in taxable accounts, because their interest is exempt from state income taxes.

Those are general rules. Let’s move beyond those basics to a higher level of mutual fund tax planning.

You know that a mutual fund avoids income taxes by distributing to shareholders most of its net interest, dividends and capital gains. Only the shareholders are taxed on the income.

Shareholders on the date of the distribution pay the taxes. If you buy shares in a taxable account the day before a distribution, the distribution will be included in your income for the year, though it really is a return of your investment. The net asset value of the shares is reduced by the amount of the distribution.

When you’re investing or consider-ing an investment in a mutual fund, know its regular distribution dates. You want to make new investments just after, not before, a distribution.

When you made an investment shortly before a relatively large distri-bution, there’s a strategy you might want to use to reduce the tax burden on the distribution.

Suppose Max Profits invests in a fund with a $15 net asset value per share. The fund distributes $5 per

share the next day. Max now has $5 of income and shares with a net asset value of $10 and a basis of $15.

Max can have the shares redeemed for $10, realizing a $5 short-term capi-tal loss that offsets the distribution.

The strategy might not be worth do-ing if the fund has a redemption fee on short-term holdings or if Max invests through a broker who charges transac-tion fees on the trades.

In addition, to be able to deduct the loss, Max has to wait more than 30 days to re-invest in the fund.

It is best to know a fund’s distribu-tion schedule and avoid buying new shares shortly before a redemption.

You don’t want to own mutual funds in a taxable account that dis-tribute a lot of gains and income each year. The taxable account should be for investments that let gains com-pound for years with minimal annual distributions.

If a fund has a total return of $8 per share during the year, you don’t want it to distribute $4 of that return so that you have to pay taxes on them. You want the gains to stay in the fund and compound over time.

You want to be able to control when most of the taxes are incurred, and you want them to be long-term capital gains.

To decide which funds to own in taxable accounts, study a fund’s turn-over ratio and distribution history.

The turnover ratio is a measure of the frequency of a fund’s trading. A fund that trades frequently has a high turnover ratio and usually is generat-ing a lot of gains, especially short-term gains, that will be distributed to share-holders by the end of the year.

You can find a fund’s turnover ratio in its prospectus and in many of the online data sources of mutual funds.

The turnover ratio is a rough mea-sure of a fund’s likely annual distri-butions. A more precise measure is a fund’s distribution history. The fund’s prospectus and many online sources list the amount of the distributions made in recent years. You can see if the fund regularly has high distributions, periodically makes high distributions, or keeps its annual distributions low.

The prospectus and many online sources also provide a table that com-pares the total return of the fund to its after-tax return for a hypothetical shareholder.

Two funds can have identical total returns over time. Yet, their sharehold-ers can have dramatically different after-tax returns because of differences in annual distributions.

It also is a good move to check the types of distributions a fund has made.

When a fund owns an investment for more than one year before selling, any gain produced is a long-term capital gain. When the gain is distributed to shareholders, they report it on their returns as long-term capital gains. The shareholders retain the tax advantages

You want to be able to control when most of the taxes are incurred, and

you want them to be long-term capital gains.


of the long-term gains.But when a fund sells a winning

investment after owning it for less than one year, it distributes short-term gains that shareholders must report as ordinary income to be taxed at their regular rate.

When a mutual fund has a high turnover ratio or a history of large distributions, try to own that fund in a tax-deferred or tax-free account instead of a taxable account.

A little-known trick is to check a fund’s prospectus or the online data sources for the amount of its loss car-ryforwards and unrealized gains before deciding which fund to buy.

When a mutual fund has net losses from its transactions for the year, it doesn’t distribute those losses to share-holders. Only net gains and income are distributed. The losses are kept on the fund’s books and can be used to offset future gains.

If a fund had a poor year or stretch of bad years, it might have loss carryfor-wards on its books. Those carryforwards will shelter future gains from taxes.

You don’t want to buy a dog of a fund simply because it has loss carryforwards. But when you’re considering funds with similar long-term records, one with high loss carryforwards might generate higher after-tax returns than one with few or no carryforwards.

You might want to search for loss carryforwards when an investment sector has been down for a couple of years and you’re thinking it’s ready to turn around. Another time to examine carryforwards is when a fund had a rough couple of years because a small number of its investments

did poorly, but you think the fund is ready to turn around.

Investors buy index funds partly be-cause of their tax efficiency. Index funds usually make fewer trades than most active funds, so they have lower distribu-tions. That’s the general rule, but it doesn’t apply to all index funds.

Some fund companies manage their index funds with more tax efficiency than others. The money managers at those fund companies work hard to offset gains with losses. Others are much more passive and have higher taxable distributions.

The taxable distributions also vary because funds have different ways of tracking an index. Some funds buy the individual stocks in the index. But others use futures, options and other tools for at least part of their portfolios. These posi-tions trigger gains as they mature, which happens frequently, and the gains usually are short-term.

These situations are especially likely for funds that track an index other than a large-company stock index. The less liquid the index tracked by a fund, the more likely it is that the fund will deviate from the index, will use methods other than direct ownership of the stocks and will have higher taxable distributions.

Any mutual fund can lose control of its tax situation when it experiences a large amount of redemptions. A redemption run can occur when investors lose interest in the sector the fund invests in or decides better funds are available. As investors redeem their shares, the fund has to sell investments to meet the redemptions. If the sales result in gains, the shareholders who remain in the fund pay taxes on the distributions of the gains.

Some investors refer to this as the death spiral or tax spiral. The longer you stay in a fund that is losing shareholders, the larg-er your annual tax bill is likely to become.

Index investors should compare open-end mutual funds to exchange-traded funds (ETFs). ETFs have some tax tricks and strategies available that open-end funds cannot offer investors. Any fee you pay to buy the ETF through a broker might be negligible compared to the tax savings over time.

Mutual funds encourage investors to automatically reinvest distributions. There are some good reasons to do that. But over the long run, when the fund is held in a taxable account, reinvestment of distributions results in more headaches and tax issues.

Each time a distribution is reinvested, your basis in the new shares is their value on that date. Most people go for years holding a fund and reinvesting distribu-tions. They have a bunch of shares bought at different times and different prices. When they’re ready to make partial sales of their holdings to fund retirement, they have a complicated tax picture. They have to determine the tax basis and holding period of each share sold.

It is better to avoid automatic reinvest-ment of distributions. Instead, let distri-butions accumulate in a money market fund. Then, use the account to rebalance your portfolio by purchasing new shares in funds that have lagged the others.

These strategies are in addition to the selling strategies of your funds' shares discussed in our March 2018 issue.

Investment Recommendations and PorfoliosJune 2019 10

Why the Fed and the Markets Are in Conflict The Federal

Reserve success-fully used its messaging ability to stem the economy’s

decline and help investment markets. But what comes next?

The Fed tightened policy too much in 2018. The effects were felt globally. Economic growth slowed and most asset markets declined. Market interest rates rose higher than the interest rates the Fed controls. The 10-year treasury rate rose from 2.10% in September 2017 to 3.22% in November 2018.

Sensing the growing pessimism in the markets and seeing rapidly slow-ing growth in economic data, the Fed announced plans in December 2018 to hold off on raising interest rates further. In early 2019, the Fed made clear it wouldn’t raise rates for a while, perhaps not for the rest of 2019. The Fed also said it would develop a plan to stop reducing the size of its balance sheet.

The Big Pause allowed the Fed to arrest the decline in economic activity without taking action. Market interest rates declined, with the 10-year treasury sinking from that 3.22% rate in Novem-ber 2018 to about 2.40% recently.

Investors went from expecting at least two rate increases in 2019 to expecting none. That change in expectations was

enough to reduce market interest rates, boosting asset prices and consumer spending.

The more difficult decision is what comes next.

What really matters isn’t what the Fed does, it’s what the Fed does compared to what the markets are expecting. In 2018, the Fed raised rates significantly more than investors were expecting at the start of the year. In September 2018, Fed officials made public state-ments indicating that rates would rise significantly in 2019. Those actions were dramatically different from investor expectations and led to the market tumble in the fourth quarter of 2018.

The problem for the Fed now is that, according to fu-tures market prices, investors expect at least one interest rate cut in 2019 and many expect two cuts. The Fed says it is content with the status quo and doesn’t plan to cut rates in 2019. There’s no reason for the Fed to cut rates or otherwise increase the monetary base unless inflation or economic growth dip below their recent ranges.

That conflict is going to present a problem for

markets as the year goes on.Stocks and other assets are priced

with the expectation that the Fed will reduce interest rates this year. If it be-comes apparent the Fed won’t cut rates, then investors are likely to reduce stock prices.

Another headwind for stocks is that economic growth is lower than the 3.2% annual rate reported in the first estimate of gross domestic product (GDP) for the first quarter. A big portion of the reported growth was artificial, coming

Investment Recommendations

2007

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S&P 500 3-Month Volatility

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5.0

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from an increase in inventories. Real economic activity was lower, probably 2% or less. Business investment and consumer spending both are increasing but only modestly.

Corporate stock buy backs have been a major support for stock prices. Com-panies spent a record amount on buy backs in 2018. So far, announced buy backs for 2019 are lower than for 2018. The potential for reduced corporate

stock buy backs is another headwind for stocks. Rising wages are another headwind to stocks, since they’re likely to hurt earnings growth.

The news from overseas is a bit better.Europe appears to be stabilizing after

flirting with a recession in late 2018. It is still a dicey situation in Europe, because the European Central Bank has limited ability to stimulate the economy if it’s needed. But so far, the growth rate

seems to be increasing.China is rebounding so well from the

2017-2018 slowdown that the country recently reduced some of its stimulus measures. Other Asian economies and markets are closely tied to China and tend to follow its path. Of course, Chi-na’s protracted trade conflicts with the United States increase volatility and un-certainty. But so far, the conflicts have been more noise than real action.

How to Handle Rising Volatility and Uncertainty in the MarketsMarket

volatility increases in the late stage of the economic cycle, and that’s the

stage in which we are operating.More factors than usual contributed

to high volatility in the last couple of years. The Fed abruptly has changed pol-icies a couple of times. Trade conflicts, especially with China, roil markets each time there’s a change in the potential for a resolution. Economic data switches from strong to weak in a matter of months.

Expect the volatility to continue. There’s more risk of a surprise to the downside than to the upside. Don’t try to react to the latest news and noise, and don’t try to anticipate one outcome for the economy and markets.

This is a good time for investors to be sure their portfolios are balanced and diversified and their investments have adequate margins of safety. Your goals should be to earn safe, solid returns if the economy and markets continue to do well but have downside protection against a change of direction.

Stocks, both in the United States and globally, have done well in 2019. WCM

Focused International Growth (WCM-RX) continues to set a strong pace. The

PORTFOLIO Sector Portfolio Fund Allocation Ticker 4-Wk

ReturnAdd New

Cash?Vanguard Treasury Money Market 10.0% VUSXX 0.21% Yes

Cohen & Steers Realty Shares 13.0% CSRSX 0.31% Yes

WCM Focused International Growth 16.0% WCMRX 2.36% Yes

iShares Gold Trust 5.0% IAU -1.60% Yes

Hussman Strategic Growth 19.0% HSGFX -3.37% Yes

Cohen & Steers Infrastructure 7.0% UTF 0.35% Yes

DoubleLine Emerging Markets FI 10.0% DBLEX 0.71% Yes

T. Rowe Price New Asia 10.0% PRASX -4.64% Yes

Wasatch-Hoisington U.S. Treasury 10.0% WHOSX 0.98% Yes

*Returns are as of May 10, 2019

There are no changes to make this month. The portfolio is handling recent market volatility well and should be able to handle any market environment.

Balanced PortfolioFund Allocation Ticker 4-Wk

ReturnAdd New











Hold all positions this month. The portfolio is well diversified, and we'll stay with this level of balance until the markets establish a new trend.


fund is up 2.36% in the last four weeks despite the latest trade conflict headlines, and has a total return of 17.75% for the year to date.

WCMRX consistently is among the top-ranked funds in its category over most time periods. The fund’s strategy is unique, showing that to beat the index-es and most investors a fund has to do things differently.

The fund invests in a small number of stocks and usually holds them for years. It recently held 32 stocks and had almost 40% of the fund in its 10 largest positions. The annual turnover ratio is only 26%.

The fund looks to own a few great growth companies. It begins by looking only at companies with low or no debt that have had high returns on capital in recent years. Then, the fund’s analysts examine the companies for signs that their growth is sustainable.

A company’s management should foster a culture of growth. The compa-ny also should benefit from key global trends, such as the growth of the middle class and increased use of technology. The fund prefers companies that have barriers to competition, whether those are legal and regulatory barriers, ob-stacles to customers seeking to change suppliers, or something else.

Technology is the largest sector in the fund, making up 27% of the portfolio. Other key sectors are health care, con-sumer cyclical, industrials and financial services. The largest holdings in the funds recently were CSL Ltd., Canadi-an Pacific Railway, Tencent Holdings, Accenture and Shopify.

Another global stock fund that has done well is the closed-end fund Cohen &

Steers Infrastructure (UTF). The fund is up 0.35% in the last four weeks and is up 28.78% so far in 2019. The fund’s shares generally have been rising faster than its net asset value, so the discount to net asset value declined to 2.86% from a six-month average of 6.15%.

The distribution yield is 7.51%. A little over a penny of the 2019 distributions have been return of capital, while none of the 2017 and 2018 distributions were return of capital.

The fund’s managers develop an economic outlook and search for in-frastructure firms selling at reasonable prices that are likely to benefit from that outlook. About half the fund is invested in U.S. companies. The fund doesn’t try to follow an index, so it doesn’t own a company or industry simply because it is in an index.

The top sectors were electric utilities (28%), midstream pipeline companies (13%), cell towers (11%), railroads (6%) and toll roads (6%). About 15% of the fund is invested in bonds and preferred stocks.

This has been an ideal economic envi-ronment for real estate investment trusts

(REITs), and investors have noticed. Cohen & Steers Realty Shares (CSRSX) is up 0.31% for the last four weeks and 18.72% so far in 2019.

As with other funds from Cohen & Steers, the fund’s managers first develop an economic outlook and then deter-mine which REIT sectors are likely to benefit most from that outlook. In those sectors, the fund buys REITs that have quality management and quality proper-ties and sell at reasonable prices.

The fund doesn’t try to mimic an index and focuses on its best ideas. It owns fewer REITs than most other REIT funds. Recently, it owned only 43 REITs and had over 50% of the fund in its 10 largest positions.

Top sectors in the fund were apart-ments (13%), infrastructure (13%), data centers (10%), health care (9%) and self store (9%). Top holdings were Amer-ican Tower, Equinix, Welltower, UDR and Prologis.

Recently, we’ve added some emerging market positions to the portfolios.

Emerging markets suffered in 2017 and 2018, while U.S. markets were soaring. They’re likely at or near the

Income Growth Portfolio Fund Allocation Ticker 4-Wk

ReturnAdd New











Don't make any changes this month. The balance and diversification is holding up well despite the high volatility and rapid market changes so far in 2019.


bottom of their cycles and selling at better values than U.S. assets. Emerg-ing markets also are likely to benefit as the Fed moves from tightening to its current pause and eventually to looser monetary policy.

Bonds are a conservative way to invest in emerging markets. They tumbled in 2018 as global interest rates rose. Now, the bonds pay attractive yields and should generate capital gains as rates decline.

We added DoubleLine Emerging Markets Fixed Income (DBLEX). The fund is up 0.71% in the last four weeks and 6.26% for the year to date. The

yield is 5.04%. DBLEX is another fund that doesn't

try to match an index. Its management evaluates the economy and political sit-uation of each emerging market country and determines which it wants to invest in and which it wants to avoid. The fund’s priority is preservation of principal; many emerging market bond funds take too much risk by seeking maximum yield.

DBLEX also primarily owns bonds that are denominated in U.S. dollars, so U.S. investors aren’t subject to currency risk.

We also own Asian emerging market

stocks through T. Rowe Price New Asia (PRASX).

The fund was having a good year until the trade conflicts between the United States and China surged back into the headlines in early May. The T. Rowe Price fund should rebound once the conflicts recede again.

China’s economy leads most of its coun-terparts in Asia. China reduced growth in 2017 and most of 2018 but added stimulus in 2018. The stimulus worked. The coun-try’s growth exceeded the government’s target in the first quarter of 2019, so some of the stimulus was scaled back. Growth is likely to continue around 6% a year.

PRASX has excelled at investing in Asian emerging market stocks for decades. It follows T. Rowe Price’s pro-cess of buying a small number of growth companies selling at reasonable prices and holding them for a few years. The fund re-cently owned 80 stocks and had an annual turnover ratio of 50%. About 39% of the fund is in its 10 largest positions.

Top holdings in the fund recently were Tencent Holdings, Alibaba, Samsung,

True Diversification PortfolioFund Ticker Alloc. 3 mos. 1-Yr. 3-Yr. 5-Yr. 10-Yr.Total Portfolio 100% 4.65 5.38 6.74 3.97 6.66

Plus or minus S&P 500 -4.83 -8.09 -8.17 -7.74 -8.80

Price Capital Appreciation PRWCX 11% 5.20 12.43 11.11 10.07 12.75

Price HY PRHYX 11% 3.49 5.39 7.00 4.02 8.99

FPA Crescent FPACX 18% 5.51 4.84 8.64 5.51 9.38

Berwyn Income BERIX 13% 1.21 2.81 4.14 2.56 7.16

Cohen & Steers Realty Sh CSRSX 5% 3.98 16.52 6.07 8.60 14.50

Oakmark** OAKMX 5% 4.83 -0.14 13.60 8.71 14.20

William Blair Macro Alloc*** WMCNX 12% -0.43 -2.09 2.13 0.05 n/a

Leuthold Core Investment**** LCORX 12% 0.94 -1.55 5.44 4.14 7.02

iShares Select Commodity COMT 8% 0.23 -9.08 7.99 n/a n/a

WCM Focused International Growth WCMRX 5% 10.18 6.41 12.65 8.31 n/a

Returns longer than one year are annualized. *Added to the portfolio in February 2012 issue. **Added in the December 2014 issue. ***Added in the September 2015 issue. ****Replaced MainStay Marketfield in the June 2016 issue. In the June 2018 issue we eliminated PAUDX and PRRDX. The PRRDX proceeds were put in COMT as were some of the proceeds from PAUDX. The remaining proceeds from PAUDX were put in LCORX, and WCMRX. Portfolio returns are as of April 30, 2019. Fund returns are as of May 9, 2019. N/A=Not Applicable.

Retirement Paycheck Portfolio

Fund Ticker Allocation12-mo. Yield

Add New Cash?

Vanguard Treasury Money Market VUSXX 40.0% 2.34% Yes

Verizon VZ 5.0% 4.23% Yes

Reaves Utility Income UTG 10.0% 5.95% Yes

DoubleLine Emerging Markets FI DBLEX 15.0% 5.04% Yes

C&S Infrastructure UTF 7.0% 7.51% Yes

C&S Ltd Duration Preferred & Inc LDP 10.0% 7.77% Yes

Cohen & Steers REIT & Preferred Inc RNP 13.0% 7.09% Yes


Hold all positions. The portfolio continues to deliver an above-average year while also adding some capital gains to preserve purchasing power.


AIA Group and Taiwan Semiconductor. The fund declined 4.64% in the last

four weeks but has a total return of 12.72% for the year to date.

As a hedge against a market decline, we own Hussman Strategic Growth (HSGFX).

The fund invests in a portfolio of about 130 stocks that have solid recent growth, good momentum and reason-able valuations.

In addition, the fund can use fu-tures and options either to leverage the portfolio in bullish times or hedge it in a bearish environment. Manager John Hussman had a difficult time imple-menting the futures and options strategy following the financial crisis. He adjusted the parameters he used in late 2017 and has had better results since.

The fund was hedged for most of 2018 and rose in value as the market declined.

Recently, Hussman said his market indicators shifted to neutral, so the fund’s position is “fairly neutral” at this point. While many of the technical indica-tors Hussman follows say investors are inclined toward speculation, there are other factors that indicate investors aren’t exuberant. For example, about half of all stocks traded below their 200-day moving averages as the market indexes set record highs.

The fund is down 3.37% in the last four weeks and 10.53% for the year to date.

Since the Fed isn’t inclined to increase interest rates and the economy has weakened, interest rates are low and more likely to decline than increase. Long-term bonds are good to own in this situation.

We own Wasatch-Hoisington U.S.

Treasury (WHOSX). The fund invests only in U.S. Treasury securities and can adjust the duration of the securities it owns based on the fund’s outlook for interest rates. When rates are likely to rise, it owns short-term securities; when rates are likely to decline, it owns long-term treasuries.

The fund has owned long-term treasuries for a number of years. The managers don’t try to capture short-term changes in rates. They’ve expected rates to decline, with periodic reversals, for some time and thus have held the fund’s duration at 20 years and longer.

The managers’ latest outlook is that weak economic growth, excessive debt and other factors will prevent any sus-tained rise in interest rates.

The fund is up 0.98% in the last four weeks and 4.41% for the year to date. Its yield is 2.23%.

We’ve owned a position in gold as a hedge against inflation and geopolitical events.

The best way to own gold is through iShares Gold Trust (IAU). It has very low fees and isn’t widely owned by hedge funds and other investors whose fast trading can cause periodic anomalies in

the pricing of an exchange-traded fund. IAU is down 1.60% in the last four weeks but is up 0.24% for 2019.

Rounding out the portfolio is a money market fund. We shifted this diversifying position out of intermediate bond funds after the Fed began its tightening policy in earnest. In time, we’ll shift out of the money market fund. But for now, it provides the same yield as many inter-mediate bond funds with no risk to the principal.

I use Vanguard Treasury Money Market (VUSXX). It has very low fees and maximizes safety by investing in only treasury securities. Use another money market fund if it is more conve-nient or you want to earn a higher yield than a treasury-only fund.

VUSXX has a yield of 2.34%. It re-turned 0.19% in the last four weeks and 0.85% for the year to date.

RETIREMENT PAYCHECKTraditional conservative retirement

income investments haven’t generated reasonable yields since the Fed adopted its zero interest rate policy following the financial crisis.

That’s why I developed the Retirement

Portfolio PerformanceSector Balanced Income

GrowthRetirement Paycheck IWW ETFs

One Month 0.25% 0.28% 0.61% 1.13% 1.15%Year to Date 6.28% 5.89% 6.35% 8.24% 1.73%Last 12 Months -1.68% -0.92% 1.30% 6.35% -1.58%3 Years* 7.22% 7.00% 4.75% 5.98% -0.38%5 Years* 4.31% 3.76% 3.11% 5.61% -5.78%10 Years* 5.01% 4.61% 4.24% N/A 0.59%Compound Return 386.61% 347.85% 68.02% 79.16% 67.69%

*Annualized. Returns are as of April 30, 2019. The Income Growth Portfolio was begun in July 2001. The Retirement Paycheck Portfolio began Dec. 2010. The IWW-ETF Portfolio began December 2005. Other portfolios began Jan. 1995.

The portfolios held up well in April. They're likely to give up some of those gains in May as the trade conflicts escalate. But diversification and balance will minimize losses and allow for a quick rebound.


Paycheck portfolio. We invest in a range of other investments, such as preferred stock, closed-end funds, high-yield bonds, master limited partnerships and more. We earn a higher yield but without taking the risks of those seeking the highest yields.

This isn’t a buy-and-hold portfolio be-cause these investments can be volatile as investors rush into the vehicles making headlines with the highest recent yields and returns. We buy when there’s a mar-gin of safety and sell when an investment is too richly priced.

We already discussed DoubleLine Emerging Markets Fixed Income, Cohen & Steers Infrastructure and Vanguard Treasury Money Market.

This has been a good year for utility stocks, and we participated through the closed-end fund Reaves Utility Income (UTG).

The fund has specialized in utility stocks for decades and is among the leading utility stock funds over most time periods. It returned 1.33% in the last four weeks and 18.35% for the year to date. Its distribution yield is 5.95%, and it doesn’t make a return of capital distributions. The fund uses about 21% leverage.

The fund has been very popular, with its share price rising faster than its net as-set value. It most recently sold at a small premium to net asset value of 0.09%, compared to a 2.07% six-month average discount. We’ll sell if it sells at more than a slight premium or at a premium for more than a brief period.

Preferred stocks are good income vehicles when interest rates aren’t rising. They pay higher yields than treasury and investment-grade bonds but aren’t

as risky as high-yield bonds and many other income vehicles. They are a good middle-ground choice.

One way we own preferred stocks is through the closed-end fund Cohen & Steers Limited Duration Preferred & Income (LDP).

The fund limits risk by having a dura-tion of no more than six years for its port-folio. It also uses leverage of about 30%.

It returned 0.23% in the last four weeks and 13.38% for the year to date. The distribution yield is 7.77%. It has made a return of capital distributions most years. The latest discount to net asset value is 3.60%, compared to a 5.44% six-month average.

You know I like REITs and preferred securities in this economic environ-ment. We have this combination in one fund, Cohen & Steers REITs & Preferred Income (RNP). The fund is about evenly split between the two types of investments.

It uses about 25% leverage. The distri-bution yield is 7.09%, and the fund hasn’t made a return of capital distribution in 2019. The latest discount to net asset value is 8.30%, which compares with a six-month average discount of 10.80%.

RNP has a total return of 1.48% in the last four weeks and 20.87% for the year to date.

Our lone individual stock at this point is Verizon (VZ).

The stock outperformed the indexes through 2018 but began to lag recently. Investors have some concerns about the short-term outlook for earnings. The company lost wireless subscrib-ers, primarily because it offered fewer promotions. It also is putting capital into

building the new 5G network. The stock pays a solid 4.23% yield, and

the cash dividend should increase each year. The stock declined 2.90% in the last four weeks but gained 3.37% for the year to date.

TRUE DIVERIFICATIONThe True Diversification portfolio

continues to deliver its combination of solid returns with much less risk than the market averages.

Longtime readers know that tradition-al portfolios aren’t as diversified as inves-tors believe. The volatility and returns of those portfolios are about 90% correlated with the major stock indexes.

Our portfolio is composed of mu-tual funds that have low correlations with each other and most of them have low correlations with the major stock indexes. But the funds all have long-term returns comparable to the indexes over a full market cycle.

We lag the indexes when the Fed is stimulating the economy and boosting stock prices. But our portfolio loses far less capital and sometimes increases in value when stocks are flat or declining.

Every three months, we take a detailed look at the portfolio. We offer a few high-lights this month.

Our strongest returns in the last three months were from global growth stocks through WCMRX. Other stock-heavy funds did well, but not as well. Funds that focus on other assets, such as commodities, or have more diversified portfolios lagged the group.

When you look at the table of returns, you can see how the best- and worst-per-forming funds shift over the different


Robert C. Carlson wrote the book on retirement and retirement planning—twice: The New Rules of Retirement (Wiley, 2nd ed. 2016) and Personal Finance after 50 for Dummies (with Eric Tyson; 2nd ed. 2015). He also serves as Chairman of the Board of Trustees of the Fairfax County (Va.) Employees’ Retirement System (a more than $3.0 billion portfolio) and served on the Board of Trustees of the Virginia Retirement System (a $42 billion portfolio in 2005) from 2000-2005. He was educated at the University of Virginia School of Law and McIntire School of Commerce (M.S.) and Clemson University.

Challenges Investors Face: The TJT Solution to Portfolio Management Many investors need help with their portfolios. We saw that with the strong registration and turnout for the webinar featuring Bob Carlson and TJT Capital, “Challenges Investors Face: How TJT Capital Manages Portfolios to Participate in Bull Markets and Protect Capital in Bear Markets.” The webinar is available for replay at www.tjtcapital.com. If you like Bob Carlson’s margin of safety approach and methods of selecting mutual funds, log in or contact TJT Capital at 877-282-4609 or [email protected].

time periods. That’s another sign the portfolio is well-diversified.

INVEST WITH THE WINNERSLast month, we moved this portfolio

into Invesco QQQ (QQQ) after several months in cash.

The fund is down 0.25% in the last four weeks, with the entire decline com-ing in the last week when the renewed trade conflict with China caused mar-kets to tumble. Before that, the fund was up over 3% for the month.

In this strategy, I use several models to determine which ETF has a strong recent performance that is likely to continue. The models indicate we should stay in QQQ for at least anoth-er month.

Planning for LifeI’ve known a

lot of retirees over the years. These days, I know retirees from different

generations of retirement. There are people like my parents, who are ap-proaching their nineties and have been retired for decades. There are others who retired fairly recently, even in their 50s. There are many in between.

One thing that has been consistent between retirees over the decades is that a retiree almost always can be put into one of two groups. One group is the stereotypical grumpy old men and women. I don’t think you need a more detailed description. The other group is happier, even joyful, with some of them bordering on exuberant. They give the impression that they started over instead

of ending something, and are genuinely optimistic about it. I sometimes think of them as taking a victory lap.

Both groups planned their retirement finances well, but only one group pre-pared their retirement lives. They looked forward to starting over and having time for activities other than work. They still seek new things to do, no matter how long they’ve been retired. The grumpy group generally didn’t consider how to spend their time in retirement, rebuild their social networks and more. They largely dwell on what they miss about working and haven’t replaced it.

We focus on retirement finances in Retirement Watch. The financial part, however, is to enable you to do what you want with your time. To have a satisfac-tory, successful retirement, your plan has to include your full retirement life.

That brings this month’s issue to a

close. I’ll be back next month with an update on the markets and the latest re-search and recommendations on estate planning, IRA management, income tax reduction and more.

P.S. You should try my Retirement Watch Spotlight Series because the June edition will feature my detailed mid-year invest-ment and market review and outlook. I’ll also include the latest list of the best choices among different types of annuities. You can view the seminars whenever you want from wherever you can access the internet. It is a powerful learning tool that is attract-ing more and more viewers. To learn more about the Spotlight Series, go to the top of the RetirementWatch.com home page and select the Spotlight link.

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Just like Weight Watchers, this company is also riding the wave of unstoppableearnings growth.

But, unlike Weight Watchers, which profits in the diet sector, this company is makingmoney hand over fist in the construction sector.

This is why the world’s biggest institutional investors have been adding it to theirholdings — and for one good reason.

The soaring economy has been very, very good for it.

It’s no wonder.

Low interest rates, rising wages, and demand for residential housing is just one factorfueling this construction boom.

Plus, with more Americans working, governments are flush with tax dollar. They areusing the additional cash to spend more on schools, roads, and other public facilities.

All of which have been incredibly lucrative for this construction equipmentmanufacturer.

This is how the company generated a whopping $54 billion over the past 12 months. Allthanks to construction spending across the board.

And get this:

Despite the company’s 25% projected earnings growth, it’s still a bargain — selling for 13times earnings!

This is why Wall Street’s biggest institutional investors and mutual funds have gone allin to the tune of nearly $30 billion.

They’re not the only ones that see another Weight Watchers in the making; one of WallStreet’s top analysts does as well, raising their earnings expectations not only for 2019,but also for 2020.

Here’s the best part:

Nobody in the financial media is talking about this company. The only investmentsthey are writing about are marijuana stocks and bitcoin.

After all, there are much better stories to sell advertising than one construction playthat’s projected to capture 25% earnings growth for the next five years.

So it’s completely off the radar… along with the tidal wave of money it’s attracting frombig-money players like Blackrock and State Street.

The only reason I know about it is because I’ve been a Wall Street insider for the past 30years.

Because I’m in direct contact with the key players on Wall Street, I can tell you withunparalleled certainty that this is THE COMPANY they are targeting for triple-digitgains over the next 12 months.

In order to help you get in on the ground floor, I’ve put together a special report titled

The 3 Best Value Stocks to Buy Now that will give you all thedetails on this company, plus two other value stocks we aretargeting for double- and triple-digit gains.

This report is yours, absolutely free. All I ask is that you givemy investment research advisory service, Value Authority, atry.

If you like buying undervalued stocks for quick profits, youwon’t be disappointed.

You’re automatically guaranteed 10 double-digit winners in 12months, so you’ll come out a winner!

That’s our sole mission here at Value Authority: to get you inearly, on the ground floor of undervalued companies, before Wall Street takes noticeand their prices jump.

Our results speak for themselves:

+37.08% Everest Re Group +16.68% Walmart

+35.68% Rocky Brands +16.52% Johnson & Johnson

+33.55% St. Jude Medical +16.46% Kellogg

+33.49% Rocky Brands +15.24% Lowe’s

+27.82% Abbott Laboratories +14.99% CSS Industries

+25.96% Goldman Sachs +14.90% Verint Systems

+25.06% Travelers +14.64% Becton, Dickinson and Co.

+24.27% Genpact Limited +13.98% Crane

+24.12% Universal Health Services +13.97% PAREXEL International

+22.10% Reliance Steel +13.95% Scholastic

+21.66% Check Point Software

Technologies+13.87% BB&T

+20.51% Zimmer Biomet +13.79% Flushing Financial Corp.

+19.31% National Healthcare +13.74% Selective Insurance Group

+19.21% ICON +13.51% Qualcomm

+18.80% Cisco Systems +13.40% Innospec

+17.67% TEGNA +13.36% St. Jude Medical

With Kiplinger’s latesteconomic forecast showingeconomic growth shootingthrough the roof, my handsitch thinking of the profitscoming our way as a tidalwave of money floods thesector.

+17.63% Henry Schein +13.26% ABB

+17.55% Cooper Tire and Rubber +13.19% 3M

+17.09% Ingredion +12.91% Carnival Corp.

As proud as I am of these wins, I must admitthey pale in comparison with our newestrecommendations, especially now that U.S.fund managers are hopping on the valuebandwagon.

And it’s all because value stocks zoom whenthe economy is accelerating.

I’ve already told you about our No. 1 pick… acompany that’s about to see its stock pricesoar threefold.

That’s just the first of three value plays wesee handing out double- and triple-digitgains in 2019.

I’ve included all the details in my 2019 profitforecast, The 3 Best Value Stocks to BuyNow.

Again, the report is yours free… just forgiving Value Authority a try.

Here’s a quick look at the rest of them.

That way you’ll see the kind of valueopportunities we are targeting for double-and triple-digit returns and the kind ofopportunities you’ll find each week in ValueAuthority.

As consumer spending heats upand tax reform kicks in, we’reexpecting a 25% to 50% bumpfrom this beaten-down foodcompany as the combinationcould triple the company’sgrowth rates. I’m not the only one who sees the breakout here. Tenbig money insiders, including Blackrock and State Street, have goneall in here, too, to the tune of $4 billion! As you’ll see in your freereport, you’ll want to follow their lead.

Our top bank stock is set for a big breakout here as well, thanks to

21% earnings and its 3%+ dividend. In the past 30 days, three topanalysts have revised earnings upward for 2018 and 2019 for thesame reasons we have: they see the company delivering another 21%earnings growth next year.

Click the Link Below to Get The 3 Best Value Stocks to Buy NowSent Directly to Your Inbox Tonight

In this exclusive report, you’ll get an inside look at each one of these profitopportunities, including their names, stock symbols, and buy-below and target prices.Plus, why we’re convinced each one could rise 10% to 25% in the next 90 days.

In addition, your free report will lay the foundation for every recommendation I willbring you in the months ahead… along with our philosophy of exploiting financiallysolid, undervalued stocks before the mainstream money sees the opportunity.

In each monthly issue, we will guide you to the most promising trading opportunitiesbefore they break out… before they become front-page news… and before Wall Streetbids our holdings higher.

You’ll find nothing is easier.

For every recommendation we bring you, we’ll not only give you crystal-clear buy andsell instructions, we’ll also break down the opportunity, profit drivers, and revenuestreams to give you a panoramic overview of the opportunity each one of ourrecommendations brings you…

Along with why each one could hand you a double-digit gain in the next 60 to 90 days.

Again, The 3 Best Value Stocks to Buy Now is yours absolutelyfree… just for giving Value Authority a try.

Here’s what you’ll receive the moment you subscribe.

First, you’ll receive a welcome email with yourprivate login and password to our VIP ValueAuthority subscriber-only website, where you’llfind our current recommendations, monthly issues,and archives of all prior issues, updates, alerts, andspecial reports.

Once you’ve logged in, you’ll gain instant access tothe names, stock symbols, and buy and target prices for the threedouble-digit winners profiled in this BUY ALERT.

Then you’ll begin to receive one to three winning recommendations

every month, sent directly to you via email the moment we makethem — all value stocks set to break out and deliver 10% to 25% gainsin the next 90 days.

You’ll also receive weekly updates on all our open recommendationsuntil we sell them, so you can stay a step ahead of Wall Street.

Because the markets change daily, I will also send you a Flash Alertvia email whenever breaking news impacts any of ourrecommendations, along with complete buy, hold, and sellinstructions on steps to take to protect your wealth or maximizeyour profits.

Here’s the best part:

When You Join Us, You’re AutomaticallyGuaranteed 10 Double-Digit Winners in

12 Months or You Won’t Pay a DimeWhile our ultimate goal is to win you as a member for life, we will return your money ifyou don’t get 10 double-digit winners in the next 12 months.

Naturally, I couldn’t make an offer like this if I couldn’t deliver on this promise.

But, since launching our trading advisory in 2014, we’ve closed 59 double-digit winnersto date.

That’s why I have no problem offering you such an incredible guarantee.

You see…

I know that if you see our recommendations pan out over the next 12 months, you’llwant to continue to receive Value Authority for a very long time.

Value Authority has become one of the most profitable and fastest-growing tradingadvisories in America. Judging by our 59 double-digit winners since 2004, our advice ispaying off in droves.

If I’m right, you could easily find yourself 25% richer in the next 90 days. If I’m wrong,simply get your money back.

My money-back guarantee makes it easy, convenient, and risk-free for you to getstarted.

At 13 Cents a Day, How Can You Say No?Look…

Considering our solid track record, you’d think it would cost a fortune to join us. Nottrue!

In fact, when I tell you how little my Value Authority advisory costs, you’ll truly beamazed.

A regular subscription to Value Authority is $249 for a full year. That’s roughly half theprice other trading advisories charge for recommendations that don’t even come close.

To celebrate the New Year and, because the profit potential on these threerecommendations is so great, my publisher has allowed me to open the door for just$49.95.

That’s a $199 savings and — at just 13 cents a day — a steal of a deal considering ourguarantee that promises you a minimum of 10 double-digit winners a year.

There’s just one catch.

You’ll need to decide TODAY to grab this special $49.95 price.

Here’s why:

If you can’t act now to grab your free copy of The 3 Best ValueStocks to Buy Now and take advantage of my $199 discounttoday, chances are you won’t act when I instruct you to act onour recommendations, and it would be wrong of me to acceptyou as a new member.

That’s why you’ll need to decide today to grab my special 13-cents-a-day price.

I specifically set this up this way because, when it comes tostock trading, you simply don’t get a second chance.

Once a recommendation is gone, it’s gone.

If you have the foresight to say yes, today, all you need to do isclick the button below right now and I’ll send you your FREE copy of The 3 Best ValueStocks to Buy Now. You’ll lock in your $199 discount and begin your 13-cents-a-day trialmembership.

I’ve made it so easy, convenient, and risk-free for you to give Value Authority a try,there’s really no way you can lose here.

But you’ll have to make your decision today.

https://www.hilarykramer.com/offer/value-no1/?source=RW0619&step=2

Given the speed at which these stocks’ earnings are accelerating, I can’t promise you’llbe able to lock in my buy-below prices after tonight.

So if you’re serious about grabbing my next three double-digit winners before theybreak out, I urge you to accept my guarantee and savings offer today without hesitation.

All you have to do to get started is click the button below now.

When you do, you’ll go to a secure order form where you can review everything we’vetalked about, download your free report, and begin your trial subscription.

So is it a deal? I hope so.

Because tomorrow the annual price on my Value Authority advisory WILL revert to$249, and the window of opportunity to join me for roughly 13 cents a day will be gone.

Join me now and see for yourself the huge advantage Value Authority can bring you.

I guarantee it will be one of the smartest trading decisions you will make in 2019.

Sincerely,

Hilary Kramer Editor, Value Authority

https://www.hilarykramer.com/offer/value-no1/?source=RW0619&step=2