After several weeks of watching second and third string players battle it out on the pre-season grid iron, we have finally made it to the opening day of football season as the Steelers and Patriots face off in Foxbourough tonight.
And, as I was reading the sports section this morning, I got to thinking about how being a financial advisor is a lot like being a head football coach.
Like a head coach, you “Win” or “Lose” each year depending on your performance and AUM growth.
Like a head coach, you have to deal with an increasing number of distractions that makes it harder than ever to just focus on “Winning”:
- Owners with unreasonable expectations of success and very short leashes (for an FA, that’s the brokerage firm’s annual production targets).
- Onerous league rules and hyper sensitive game officials (for an FA, that’s the compliance department).
- Rabid fan bases who demand success and have no patience for building a winner (for an FA, that’s demanding clients who want all the gains when the market goes up and none of the losses when it goes down).
- A hyperbolic media that blows losses out of proportion and riles up the fan base (for an FA that’s the financial media that’s becoming more sensational every day).
The modern coach and the modern Financial Advisor have to constantly manage all these different relationships just to keep their jobs.
And managing these relationships makes it harder to do what the coach or FA is hired to do – TO WIN (and in the FA’s case, protect client portfolios and outperform).
The best coaches tackle these difficulties by having a great play book.
The best advisors also have a “market playbook” like The Sevens Report that they can refer to every trading day to help them navigate any market condition.
- We make sure that all of our subscribers can quickly and confidently explain all of the latest goings on in the market to nervous clients, because every day we give them the information they need to know on: Stocks, Bonds, Commodities, Currencies, and the latest Economic data.
- When it’s time for advisors to be on offense, we provide tactical strategies that have helped our subscribers outperform.
- When it’s time for advisors to be defensive, we provide strategies designed to protect client portfolios.
While a head coach’s best friend in overtime is his playbook, a financial advisors greatest asset is his or her research when the markets get volatile, because we all know there is not enough time to read the entire WSJ before the phone calls start pouring in when the DOW falls 1000 points in the first half hour of the trading day.
Our goal at The Sevens Report is to provide the best, most up-to-date “financial market playbook” and the best value in the independent research space.
And, we again got great feedback from a subscriber from Baird this week when he told me we were giving him analysis he wasn’t getting from the firm’s research department.
As we’ve been telling paid subscribers for weeks, the stock market continues to face two significant headwinds: 1) Concerns about Chinese growth, and 2) Lack of Clarity from the Fed.
Understanding both of these headwinds and having a playbook you can rely on is going to be critical over the next two weeks, as both of these headwinds will either get stronger (and stocks will decline) or get weaker (and stocks will rally).
Yesterday, stock futures rallied pre-market on reports of Chinese “stimulus” but that wasn’t exactly true, and in today’s Report we helped clarify for subscribers what is real, positive stimulus, and what is just the media hyping news headlines.
We have included that excerpt from The Sevens Report as a courtesy below:
China “Stimulus” Update (Sevens Report Excerpt)
Yesterday the “reason” for the early rally was Chinese and Japanese stimulus. But, both “reasons” were not compelling (or accurate) and fundamentally yesterday’s early move higher was weak from the start.
First, there were no new, real “stimulus” measures announced by the Chinese yesterday. The Chinese Finance Ministry simply promised to continue to push for market reforms and support the economy, but there were no material new measures taken.
As a rule of thumb, to help cut through the noise stay focused on two phrases: Interest Rate Cuts or Reserve Requirement Cuts. Those two actions are real, positive stimulus efforts, and if we see more of them over the coming months from Chinese authorities (which we should) those will be real, positive events.
Unless reports of “stimulus” from China come in the form or rate cuts or reserve requirement cuts, be skeptical of any subsequent rally.
While reports of more stimulus were a bit misleading yesterday, there were some anecdotal positives in China, however.
First, car sales in China rose for the first time in three months, rising 0.6% vs. declines of 2.5% and 3.2% in July and June, respectively.
Second, there were reports that Chinese officials drafted Blackrock CEO Larry Fink to help advise them on how to address equity market volatility.
It’s obviously unclear how much Mr. Fink was involved, but just the fact that he was (reportedly) called upon shows that Chinese officials are at least asking for help from the right people, which is an uptick compared to the flailing about we saw in June, July and August.
Bottom line, there has been some incremental positive progress in China, and if the economic data this Sunday is better than expected, we may finally see some needed stabilization.
Key Leading Indicator at a Tipping Point
One of the two leading indicator ETFs we have been watching for weeks is now at a major tipping point, and over the next week it will give a major, positive signal for markets, or roll over and tell us this correction isn’t finished.
As we’ve told you before, this bond market ETF has been a fantastic leading indicator of market pullbacks for over a year, and it correctly forecasted the July 2014 pullback, the Sept/October 2014 pullback, and the December/January 2015 pullback.
Most importantly, though, it’s also bottomed each time before the broad market, and we expect that to happen again this time.
As the chart above shows, it is now testing a technical downtrend line and, if it can break this downtrend, we will take that as a signal the bottom is “in” for this indicator and we will get more positive on stocks.
Conversely, if it fails here, we will take that as a major negative signal for markets.
We all can feel that stocks are at a major tipping point, and next week we will get additional clarity on the state of 1) the Chinese economy (via data Sunday) and 2) the all-important Fed meeting.
Our paid subscribers trust us to deliver the analysis they need for next weeks’ events, and they will have analysis of the latest Chinese economic data and the market implications at 7 AM Monday, and an FOMC Preview at 7 AM Tuesday. We will help them successfully navigate this increasingly more difficult market environment.
Subscribe today to learn which leading indicator ETF is at a decisive tipping point and make sure you have daily, independent analysis you need for the critical week ahead.
If all we do is help our subscribers get the market “right” between now and mid-December, it will be well worth the $65 per month.
And, if for any reason over the next two weeks you’re not totally satisfied, you can receive a full refund.
With retention over 90% and nearly one thousand satisfied subscribers, we are confident you’ll see the value in our daily Report. Try it. It is literally risk free.
Increased Market Volatility Will Be an Opportunity for the Informed Advisor and Investor
We aren’t Market Bears, but we have said consistently that things are going to continue to be volatile in 2015 and we’ve been right!
Over the next few months, the advisor who is able to confidently and directly tell their nervous clients what’s happening with the markets and why stocks are up or down, and what the outlook is beyond the near term (without having to call them back) will be able to retain more clients and close more prospects.
We view the next few months as a prime opportunity to help our paying subscribers grow their books of business and outperform markets by making sure that every trading day they know:
1) What’s driving markets
2) What it means for all asset classes, and
3) What to do with client portfolios.
We monitor all asset classes, break down complex topics, tell you what you need to know, and give you ETFs and single stocks that can profit from these trends.
I’m not pointing this out because I’m implying we get everything right. We don’t.
But, we have gotten this market right so far in 2015, and it’s helping our subscribers outperform their competition and strengthen their relationships with their clients – because we all know the recent volatility and drop in stocks and bonds has resulted in some nervous client calls.
Our subscribers were able to confidently tell their clients 1) Why the market was selling off, 2) That they had a plan to hedge if things got materially worse and 3) That they were on top of the situation.
That’s our job. Each and every trading day.
And, we are good at it.
We watch all asset classes to generate clues and insight into the near term direction for stocks as our job is to remain vigilant to the next decline.
While we spend a lot of time trying to identify what’s really driving markets so our clients can be properly positioned, we also spend a lot of time identifying tactical, macro based, fundamental opportunities that can help our clients outperform.
If you want research that comes with no long term commitment, yet provides independent, value added, plain English analysis of complex macro topics, click the button below to begin your subscription today.
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Finally, everything in business is a trade-off between capital and returns.
Editor of The 7:00’s Report