INSERT INTO `wp_posts` VALUES (9438,2,'2021-07-20 22:31:30','2021-07-20 22:31:30','','iceberg-4ReskwNsh68-unsplash','','inherit','closed','closed','','iceberg-4reskwnsh68-unsplash-2','','','2021-07-20 22:31:30','2021-07-20 22:31:30','',2472,'https://ns2020-investech.investech.com/wp-content/pdf_files_wp/iceberg-4ReskwNsh68-unsplash-1.jpg',0,'attachment','image/jpeg',0);
INSERT INTO `wp_posts` VALUES (9439,2,'2021-07-20 22:31:39','2021-07-20 22:31:39','<!-- wp:columns {\"verticalAlignment\":\"center\"} -->\n<div class=\"wp-block-columns are-vertically-aligned-center\"><!-- wp:column {\"verticalAlignment\":\"center\"} -->\n<div class=\"wp-block-column is-vertically-aligned-center\"><!-- wp:heading {\"className\":\"unclear\"} -->\n<h2 class=\"unclear\">Securities-Backed Loans… Just the Tip of the Iceberg?</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Aging bull markets are naturally predisposed to excesses –particularly in debt and leverage– and once again nontraditional loans are taking center stage.</p>\n<!-- /wp:paragraph --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"verticalAlignment\":\"center\"} -->\n<div class=\"wp-block-column is-vertically-aligned-center\"><!-- wp:image {\"id\":9428,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<figure class=\"wp-block-image size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/iceberg-4ReskwNsh68-unsplash-1024x576.jpg\" alt=\"\" class=\"wp-image-9428\"/><figcaption>Nine-tenths of an iceberg\'s volume is below the water</figcaption></figure>\n<!-- /wp:image --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Markets are relaxing merrily on a powerful time bomb</strong> - Stock and bond market leverage is everywhere.</p><cite><em>Business Insider – 7/30/17</em></cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:block {\"ref\":5343} /-->\n\n<!-- wp:paragraph -->\n<p>The article goes on to say, <em>\"Some of (this leverage) is transparent, such as NYSE margin debt which was $539 billion as of the June report. But the hottest form of stock and bond market leverage is opaque, offered by financial firms that usually don’t disclose the totals: securities-based loans (SBLs) – or “shadow margin” because no one knows how much of it there is.\"</em></p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>Innovative Lending Practices Make a Come-back</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>It’s been over 12 years since we warned about the highly questionable mortgage lending practices that mushroomed during the Housing Bubble. Now it appears that innovative lending is back in vogue. Securities-backed loans (SBLs) are among Wall Street’s hottest new products in this bull market, and they’ve been growing faster than Jack’s beanstalk over the past few years:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Borrowing With Stock Soars as Market Rises</strong></p><cite><em>Wall Street Journal, 7/28/17</em></cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Fidelity taps Goldman Sachs to expand lending services through RIAs</strong></p><cite><em>Investment News, 7/27/17</em></cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Goldman Sachs is launching a digital platform for the rich to borrow as much as $25 million</strong></p><cite><em>Reuters, 7/27/17</em></cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Wall Street Sharks Entice Customers With Securities-Backed Loans</strong></p><cite><em>Seeking Alpha, 8/13/17</em></cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:block {\"ref\":5343} /-->\n\n<!-- wp:paragraph -->\n<p>SBLs are often referred to as “shadow margin” because they’re not tracked in the margin debt figures, nor are they tracked by either the SEC or the brokerage regulator FINRA. Nobody knows how extensive such loans are, but based on anecdotal evidence they total at least $100 billion and we believe the figure could be much larger.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"left\",\"id\":9431,\"sizeSlug\":\"large\",\"linkDestination\":\"none\",\"className\":\"pushleft\"} -->\n<div class=\"wp-block-image pushleft\"><figure class=\"alignleft size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Morgan-Stanley.png\" alt=\"\" class=\"wp-image-9431\"/><figcaption>Morgan Stanle<strong>y</strong> Advertisement</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>According to a July 2017 <em>Wall Street Journal</em> article, Bank of America’s wealth unit had $40 billion in outstanding securities-backed loans at the end of 2016, up 140% from 2010. Morgan Stanley had $30 billion in these loans, more than double the amount in 2013. And, not to be left behind, Goldman Sachs is teaming up with Fidelity and other brokerages to broaden the availability of credit via its new digital lending program, “GS Select.”</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>What are securities-backed loans (SBLs), and why are they popular?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:image {\"align\":\"right\",\"id\":9433,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"alignright size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Wells-Fargo.png\" alt=\"\" class=\"wp-image-9433\"/><figcaption>Wells Fargo Advertisement</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>In simple terms, SBLs are loans that are marketed to investors as an easy and inexpensive way to access extra cash by borrowing against the securities in one’s investment portfolio without having to liquidate those holdings. Funds can be used for any purpose <strong><em>except </em></strong>buying more stock or repaying a margin loan. For instance, these loans might be used for buying real estate, investing in a business, funding education, or for personal use like taking a trip or paying for a wedding.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Fixed loans can run the gamut from $25,000 to $25 million or more, depending on the lender and the amount of collateral. A typical SBL agreement permits an investor to borrow from 50% to 95% of the value of the assets in his or her non-retirement investment account, based on the size of the portfolio and the types and mix of securities held. These lending arrangements can be set up as a fixed loan, but more often they’re established as a revolving SBL line of credit (SBLOC). It’s not uncommon for a firm to require that account assets have a market value of at least $100,000 to qualify for an SBLOC.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>The sales pitch is irresistible!</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Looking at the promotional materials shown in this report from broker websites touting SBLs, who wouldn’t want to avail themselves of this offering? According to the ads, you’ve worked hard to grow your investments over the years; now you can capitalize on those assets to finance your dreams without drawing down your portfolio.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"right\",\"id\":9432,\"sizeSlug\":\"large\",\"linkDestination\":\"none\",\"className\":\"pushright\"} -->\n<div class=\"wp-block-image pushright\"><figure class=\"alignright size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/UBS-Wealth-Management-1024x751.png\" alt=\"\" class=\"wp-image-9432\"/><figcaption>UBS Advertisement</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>There are some of the benefits of establishing a securities-backed line of credit (SBLOC) being touted to potential customers:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li>With an SBLOC, the cash is readily available (up to the credit limits) any time you need it.</li><li>Other than securities related transactions, there are no restrictions on how you use the loan.</li><li>An SBLOC lets you keep your investment account intact, allowing it to continue to grow.</li><li>By borrowing to meet your cash needs, you can avoid selling securities and triggering capital gains taxes.</li><li>Because SBLs are backed by portfolio assets, interest rates can be much lower than traditional loans.</li><li>Once an SBLOC is in place, it can be used repeatedly <strong><em>and </em></strong>you’re only required to make monthly interest payments – there is no maturity date.</li><li>There are usually no fees to establish the loan or credit line and funds are available quickly. Goldman Sachs’ digital platform promotes a 24-hour turnaround.</li><li>Typically, no personal financial statements, tax returns, or other documents are required.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>What’s in it for the brokers?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:image {\"align\":\"right\",\"id\":9436,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"alignright size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Goldman-Sachs-1024x698.png\" alt=\"\" class=\"wp-image-9436\"/><figcaption>Goldman Sachs Advertisement</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>SBLs and lines of credit have become lucrative new sources of income for brokerages, helping to replace revenue lost due to recent cuts in commission rates. In addition, brokers retain portfolio assets, along with their associated fees, as customers can access cash without making withdrawals. In some cases, establishing these loans may factor into a broker’s compensation, and marketing these credit options creates “sticky” clients as it’s hard to transfer assets to another broker with a securities-backed loan outstanding. Even if a client doesn’t use the line of credit immediately, the longer it’s in place, the more likely it is that he or she will eventually tap it.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>So, where’s the risk with SBLs?</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>With SBLs, as with all financial obligations, it’s vitally important to read the fine print or risks section before committing. Careful attention to this step reveals that brokerages and banks get all the benefits of secured, full-recourse loans, while customers take all the risk. This may seem acceptable in a healthy bull market, but it can be catastrophic to the pledged portfolio in a downturn.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>The following are some of the risks that investors may face if they borrow against an investment account. It’s these risks that prompted the SEC and FINRA to issue a special Investor Alert in 2015 regarding this type of lending:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li>If the value of the securities declines below a minimum level, you may be subject to a collateral “maintenance call” with little or no advanced warning, giving you minimal time to pay the loan or deposit more cash or securities in the account. Note that if this occurs, there are no extensions, and a broker can change its collateral maintenance requirement at any time without notifying you.</li><li>If you are unable to meet a maintenance call, the broker can liquidate part, or all, of your portfolio holdings at their discretion. You do not pick the stocks to sell. In a bear market, that could mean selling core holdings at a market bottom or alternatively realizing significant tax gains on long-held securities.</li><li>In a major downturn, you could be forced to forfeit all your pledged assets – in this case, the stocks, funds, and bonds in your portfolio. This is a major drawback to asset-backed loans…  In the worst-case scenario, you might lose more funds than are held in the collateral account, and as a full-recourse loan, you would be liable for any deficiency.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Why Goldman Sachs Seized a Client’s 217-Foot Yacht</strong></p><cite><em>Wall Street Journal - 8/10/17</em></cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:block {\"ref\":5343} /-->\n\n<!-- wp:paragraph -->\n<p></p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li>For SBLOCs, the interest rate on your loan is generally a floating rate that can change daily. With interest rates rising, the cost of your SBLOC could increase significantly.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:paragraph -->\n<p>The proliferation of SBLs and SBLOCs obviously increases the risks in this late-stage bull market. While history shows that excessive debt accumulation does not trigger a stock market peak, it can accelerate and intensify losses when the leverage starts to unwind in a bear market. Today’s levels of these securities-backed loans are small relative to overall consumer and business debt, but they can be dangerous. Like subprime mortgage loans 10 years ago, if trouble appears in terms of mass collateral maintenance calls, it could be just the tip of the iceberg.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:heading {\"level\":4} -->\n<h4>Excerpt from <em>InvesTech Research</em> - September 15, 2017</h4>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Also available in <a href=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/SBLs.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF format </a></p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p></p>\n<!-- /wp:paragraph -->','Securities-Backed Loans','Securities-Backed Loans… Just the Tip of the Iceberg?\n\nAging bull markets are naturally predisposed to excesses –particularly in debt and leverage– and once again nontraditional loans are taking center stage.','inherit','closed','closed','','2472-revision-v1','','','2021-07-20 22:31:39','2021-07-20 22:31:39','',2472,'https://ns2020-investech.investech.com/?p=9439',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9440,2,'2021-07-20 22:32:38','2021-07-20 22:32:38','<!-- wp:columns {\"verticalAlignment\":\"center\"} -->\n<div class=\"wp-block-columns are-vertically-aligned-center\"><!-- wp:column {\"verticalAlignment\":\"center\"} -->\n<div class=\"wp-block-column is-vertically-aligned-center\"><!-- wp:heading {\"className\":\"unclear\"} -->\n<h2 class=\"unclear\">Securities-Backed Loans… Just the Tip of the Iceberg?</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Aging bull markets are naturally predisposed to excesses –particularly in debt and leverage– and once again nontraditional loans are taking center stage.</p>\n<!-- /wp:paragraph --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"verticalAlignment\":\"center\"} -->\n<div class=\"wp-block-column is-vertically-aligned-center\"><!-- wp:image {\"id\":9428,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<figure class=\"wp-block-image size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/iceberg-4ReskwNsh68-unsplash-1024x576.jpg\" alt=\"\" class=\"wp-image-9428\"/><figcaption>Nine-tenths of an iceberg\'s volume is below the water</figcaption></figure>\n<!-- /wp:image --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Markets are relaxing merrily on a powerful time bomb</strong> - Stock and bond market leverage is everywhere.</p><cite><em>Business Insider – 7/30/17</em></cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:block {\"ref\":5343} /-->\n\n<!-- wp:paragraph -->\n<p>The article goes on to say, <em>\"Some of (this leverage) is transparent, such as NYSE margin debt which was $539 billion as of the June report. But the hottest form of stock and bond market leverage is opaque, offered by financial firms that usually don’t disclose the totals: securities-based loans (SBLs) – or “shadow margin” because no one knows how much of it there is.\"</em></p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>Innovative Lending Practices Make a Come-back</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>It’s been over 12 years since we warned about the highly questionable mortgage lending practices that mushroomed during the Housing Bubble. Now it appears that innovative lending is back in vogue. Securities-backed loans (SBLs) are among Wall Street’s hottest new products in this bull market, and they’ve been growing faster than Jack’s beanstalk over the past few years:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Borrowing With Stock Soars as Market Rises</strong></p><cite><em>Wall Street Journal, 7/28/17</em></cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Fidelity taps Goldman Sachs to expand lending services through RIAs</strong></p><cite><em>Investment News, 7/27/17</em></cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Goldman Sachs is launching a digital platform for the rich to borrow as much as $25 million</strong></p><cite><em>Reuters, 7/27/17</em></cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Wall Street Sharks Entice Customers With Securities-Backed Loans</strong></p><cite><em>Seeking Alpha, 8/13/17</em></cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:block {\"ref\":5343} /-->\n\n<!-- wp:paragraph -->\n<p>SBLs are often referred to as “shadow margin” because they’re not tracked in the margin debt figures, nor are they tracked by either the SEC or the brokerage regulator FINRA. Nobody knows how extensive such loans are, but based on anecdotal evidence they total at least $100 billion and we believe the figure could be much larger.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"left\",\"id\":9431,\"width\":512,\"height\":251,\"sizeSlug\":\"large\",\"linkDestination\":\"none\",\"className\":\"pushleft\"} -->\n<div class=\"wp-block-image pushleft\"><figure class=\"alignleft size-large is-resized\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Morgan-Stanley.png\" alt=\"\" class=\"wp-image-9431\" width=\"512\" height=\"251\"/><figcaption>Morgan Stanle<strong>y</strong> Advertisement</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>According to a July 2017 <em>Wall Street Journal</em> article, Bank of America’s wealth unit had $40 billion in outstanding securities-backed loans at the end of 2016, up 140% from 2010. Morgan Stanley had $30 billion in these loans, more than double the amount in 2013. And, not to be left behind, Goldman Sachs is teaming up with Fidelity and other brokerages to broaden the availability of credit via its new digital lending program, “GS Select.”</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>What are securities-backed loans (SBLs), and why are they popular?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:image {\"align\":\"right\",\"id\":9433,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"alignright size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Wells-Fargo.png\" alt=\"\" class=\"wp-image-9433\"/><figcaption>Wells Fargo Advertisement</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>In simple terms, SBLs are loans that are marketed to investors as an easy and inexpensive way to access extra cash by borrowing against the securities in one’s investment portfolio without having to liquidate those holdings. Funds can be used for any purpose <strong><em>except </em></strong>buying more stock or repaying a margin loan. For instance, these loans might be used for buying real estate, investing in a business, funding education, or for personal use like taking a trip or paying for a wedding.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Fixed loans can run the gamut from $25,000 to $25 million or more, depending on the lender and the amount of collateral. A typical SBL agreement permits an investor to borrow from 50% to 95% of the value of the assets in his or her non-retirement investment account, based on the size of the portfolio and the types and mix of securities held. These lending arrangements can be set up as a fixed loan, but more often they’re established as a revolving SBL line of credit (SBLOC). It’s not uncommon for a firm to require that account assets have a market value of at least $100,000 to qualify for an SBLOC.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>The sales pitch is irresistible!</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Looking at the promotional materials shown in this report from broker websites touting SBLs, who wouldn’t want to avail themselves of this offering? According to the ads, you’ve worked hard to grow your investments over the years; now you can capitalize on those assets to finance your dreams without drawing down your portfolio.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"right\",\"id\":9432,\"sizeSlug\":\"large\",\"linkDestination\":\"none\",\"className\":\"pushright\"} -->\n<div class=\"wp-block-image pushright\"><figure class=\"alignright size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/UBS-Wealth-Management-1024x751.png\" alt=\"\" class=\"wp-image-9432\"/><figcaption>UBS Advertisement</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>There are some of the benefits of establishing a securities-backed line of credit (SBLOC) being touted to potential customers:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li>With an SBLOC, the cash is readily available (up to the credit limits) any time you need it.</li><li>Other than securities related transactions, there are no restrictions on how you use the loan.</li><li>An SBLOC lets you keep your investment account intact, allowing it to continue to grow.</li><li>By borrowing to meet your cash needs, you can avoid selling securities and triggering capital gains taxes.</li><li>Because SBLs are backed by portfolio assets, interest rates can be much lower than traditional loans.</li><li>Once an SBLOC is in place, it can be used repeatedly <strong><em>and </em></strong>you’re only required to make monthly interest payments – there is no maturity date.</li><li>There are usually no fees to establish the loan or credit line and funds are available quickly. Goldman Sachs’ digital platform promotes a 24-hour turnaround.</li><li>Typically, no personal financial statements, tax returns, or other documents are required.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>What’s in it for the brokers?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:image {\"align\":\"right\",\"id\":9436,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"alignright size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Goldman-Sachs-1024x698.png\" alt=\"\" class=\"wp-image-9436\"/><figcaption>Goldman Sachs Advertisement</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>SBLs and lines of credit have become lucrative new sources of income for brokerages, helping to replace revenue lost due to recent cuts in commission rates. In addition, brokers retain portfolio assets, along with their associated fees, as customers can access cash without making withdrawals. In some cases, establishing these loans may factor into a broker’s compensation, and marketing these credit options creates “sticky” clients as it’s hard to transfer assets to another broker with a securities-backed loan outstanding. Even if a client doesn’t use the line of credit immediately, the longer it’s in place, the more likely it is that he or she will eventually tap it.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>So, where’s the risk with SBLs?</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>With SBLs, as with all financial obligations, it’s vitally important to read the fine print or risks section before committing. Careful attention to this step reveals that brokerages and banks get all the benefits of secured, full-recourse loans, while customers take all the risk. This may seem acceptable in a healthy bull market, but it can be catastrophic to the pledged portfolio in a downturn.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>The following are some of the risks that investors may face if they borrow against an investment account. It’s these risks that prompted the SEC and FINRA to issue a special Investor Alert in 2015 regarding this type of lending:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li>If the value of the securities declines below a minimum level, you may be subject to a collateral “maintenance call” with little or no advanced warning, giving you minimal time to pay the loan or deposit more cash or securities in the account. Note that if this occurs, there are no extensions, and a broker can change its collateral maintenance requirement at any time without notifying you.</li><li>If you are unable to meet a maintenance call, the broker can liquidate part, or all, of your portfolio holdings at their discretion. You do not pick the stocks to sell. In a bear market, that could mean selling core holdings at a market bottom or alternatively realizing significant tax gains on long-held securities.</li><li>In a major downturn, you could be forced to forfeit all your pledged assets – in this case, the stocks, funds, and bonds in your portfolio. This is a major drawback to asset-backed loans…  In the worst-case scenario, you might lose more funds than are held in the collateral account, and as a full-recourse loan, you would be liable for any deficiency.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Why Goldman Sachs Seized a Client’s 217-Foot Yacht</strong></p><cite><em>Wall Street Journal - 8/10/17</em></cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:block {\"ref\":5343} /-->\n\n<!-- wp:paragraph -->\n<p></p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li>For SBLOCs, the interest rate on your loan is generally a floating rate that can change daily. With interest rates rising, the cost of your SBLOC could increase significantly.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:paragraph -->\n<p>The proliferation of SBLs and SBLOCs obviously increases the risks in this late-stage bull market. While history shows that excessive debt accumulation does not trigger a stock market peak, it can accelerate and intensify losses when the leverage starts to unwind in a bear market. Today’s levels of these securities-backed loans are small relative to overall consumer and business debt, but they can be dangerous. Like subprime mortgage loans 10 years ago, if trouble appears in terms of mass collateral maintenance calls, it could be just the tip of the iceberg.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:heading {\"level\":4} -->\n<h4>Excerpt from <em>InvesTech Research</em> - September 15, 2017</h4>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Also available in <a href=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/SBLs.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF format </a></p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p></p>\n<!-- /wp:paragraph -->','Securities-Backed Loans','Securities-Backed Loans… Just the Tip of the Iceberg?\n\nAging bull markets are naturally predisposed to excesses –particularly in debt and leverage– and once again nontraditional loans are taking center stage.','inherit','closed','closed','','2472-revision-v1','','','2021-07-20 22:32:38','2021-07-20 22:32:38','',2472,'https://ns2020-investech.investech.com/?p=9440',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9441,2,'2021-07-20 22:32:40','2021-07-20 22:32:40','<!-- wp:columns {\"verticalAlignment\":\"center\"} -->\n<div class=\"wp-block-columns are-vertically-aligned-center\"><!-- wp:column {\"verticalAlignment\":\"center\"} -->\n<div class=\"wp-block-column is-vertically-aligned-center\"><!-- wp:heading {\"className\":\"unclear\"} -->\n<h2 class=\"unclear\">Securities-Backed Loans… Just the Tip of the Iceberg?</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Aging bull markets are naturally predisposed to excesses –particularly in debt and leverage– and once again nontraditional loans are taking center stage.</p>\n<!-- /wp:paragraph --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"verticalAlignment\":\"center\"} -->\n<div class=\"wp-block-column is-vertically-aligned-center\"><!-- wp:image {\"id\":9428,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<figure class=\"wp-block-image size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/iceberg-4ReskwNsh68-unsplash-1024x576.jpg\" alt=\"\" class=\"wp-image-9428\"/><figcaption>Nine-tenths of an iceberg\'s volume is below the water</figcaption></figure>\n<!-- /wp:image --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Markets are relaxing merrily on a powerful time bomb</strong> - Stock and bond market leverage is everywhere.</p><cite><em>Business Insider – 7/30/17</em></cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:block {\"ref\":5343} /-->\n\n<!-- wp:paragraph -->\n<p>The article goes on to say, <em>\"Some of (this leverage) is transparent, such as NYSE margin debt which was $539 billion as of the June report. But the hottest form of stock and bond market leverage is opaque, offered by financial firms that usually don’t disclose the totals: securities-based loans (SBLs) – or “shadow margin” because no one knows how much of it there is.\"</em></p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>Innovative Lending Practices Make a Come-back</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>It’s been over 12 years since we warned about the highly questionable mortgage lending practices that mushroomed during the Housing Bubble. Now it appears that innovative lending is back in vogue. Securities-backed loans (SBLs) are among Wall Street’s hottest new products in this bull market, and they’ve been growing faster than Jack’s beanstalk over the past few years:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Borrowing With Stock Soars as Market Rises</strong></p><cite><em>Wall Street Journal, 7/28/17</em></cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Fidelity taps Goldman Sachs to expand lending services through RIAs</strong></p><cite><em>Investment News, 7/27/17</em></cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Goldman Sachs is launching a digital platform for the rich to borrow as much as $25 million</strong></p><cite><em>Reuters, 7/27/17</em></cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Wall Street Sharks Entice Customers With Securities-Backed Loans</strong></p><cite><em>Seeking Alpha, 8/13/17</em></cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:block {\"ref\":5343} /-->\n\n<!-- wp:paragraph -->\n<p>SBLs are often referred to as “shadow margin” because they’re not tracked in the margin debt figures, nor are they tracked by either the SEC or the brokerage regulator FINRA. Nobody knows how extensive such loans are, but based on anecdotal evidence they total at least $100 billion and we believe the figure could be much larger.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"left\",\"id\":9431,\"width\":512,\"height\":251,\"sizeSlug\":\"large\",\"linkDestination\":\"none\",\"className\":\"pushleft\"} -->\n<div class=\"wp-block-image pushleft\"><figure class=\"alignleft size-large is-resized\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Morgan-Stanley.png\" alt=\"\" class=\"wp-image-9431\" width=\"512\" height=\"251\"/><figcaption>Morgan Stanle<strong>y</strong> Advertisement</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>According to a July 2017 <em>Wall Street Journal</em> article, Bank of America’s wealth unit had $40 billion in outstanding securities-backed loans at the end of 2016, up 140% from 2010. Morgan Stanley had $30 billion in these loans, more than double the amount in 2013. And, not to be left behind, Goldman Sachs is teaming up with Fidelity and other brokerages to broaden the availability of credit via its new digital lending program, “GS Select.”</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>What are securities-backed loans (SBLs), and why are they popular?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:image {\"align\":\"right\",\"id\":9433,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"alignright size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Wells-Fargo.png\" alt=\"\" class=\"wp-image-9433\"/><figcaption>Wells Fargo Advertisement</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>In simple terms, SBLs are loans that are marketed to investors as an easy and inexpensive way to access extra cash by borrowing against the securities in one’s investment portfolio without having to liquidate those holdings. Funds can be used for any purpose <strong><em>except </em></strong>buying more stock or repaying a margin loan. For instance, these loans might be used for buying real estate, investing in a business, funding education, or for personal use like taking a trip or paying for a wedding.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Fixed loans can run the gamut from $25,000 to $25 million or more, depending on the lender and the amount of collateral. A typical SBL agreement permits an investor to borrow from 50% to 95% of the value of the assets in his or her non-retirement investment account, based on the size of the portfolio and the types and mix of securities held. These lending arrangements can be set up as a fixed loan, but more often they’re established as a revolving SBL line of credit (SBLOC). It’s not uncommon for a firm to require that account assets have a market value of at least $100,000 to qualify for an SBLOC.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>The sales pitch is irresistible!</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Looking at the promotional materials shown in this report from broker websites touting SBLs, who wouldn’t want to avail themselves of this offering? According to the ads, you’ve worked hard to grow your investments over the years; now you can capitalize on those assets to finance your dreams without drawing down your portfolio.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"right\",\"id\":9432,\"sizeSlug\":\"large\",\"linkDestination\":\"none\",\"className\":\"pushright\"} -->\n<div class=\"wp-block-image pushright\"><figure class=\"alignright size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/UBS-Wealth-Management-1024x751.png\" alt=\"\" class=\"wp-image-9432\"/><figcaption>UBS Advertisement</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>There are some of the benefits of establishing a securities-backed line of credit (SBLOC) being touted to potential customers:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li>With an SBLOC, the cash is readily available (up to the credit limits) any time you need it.</li><li>Other than securities related transactions, there are no restrictions on how you use the loan.</li><li>An SBLOC lets you keep your investment account intact, allowing it to continue to grow.</li><li>By borrowing to meet your cash needs, you can avoid selling securities and triggering capital gains taxes.</li><li>Because SBLs are backed by portfolio assets, interest rates can be much lower than traditional loans.</li><li>Once an SBLOC is in place, it can be used repeatedly <strong><em>and </em></strong>you’re only required to make monthly interest payments – there is no maturity date.</li><li>There are usually no fees to establish the loan or credit line and funds are available quickly. Goldman Sachs’ digital platform promotes a 24-hour turnaround.</li><li>Typically, no personal financial statements, tax returns, or other documents are required.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>What’s in it for the brokers?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:image {\"align\":\"right\",\"id\":9436,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"alignright size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Goldman-Sachs-1024x698.png\" alt=\"\" class=\"wp-image-9436\"/><figcaption>Goldman Sachs Advertisement</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>SBLs and lines of credit have become lucrative new sources of income for brokerages, helping to replace revenue lost due to recent cuts in commission rates. In addition, brokers retain portfolio assets, along with their associated fees, as customers can access cash without making withdrawals. In some cases, establishing these loans may factor into a broker’s compensation, and marketing these credit options creates “sticky” clients as it’s hard to transfer assets to another broker with a securities-backed loan outstanding. Even if a client doesn’t use the line of credit immediately, the longer it’s in place, the more likely it is that he or she will eventually tap it.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>So, where’s the risk with SBLs?</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>With SBLs, as with all financial obligations, it’s vitally important to read the fine print or risks section before committing. Careful attention to this step reveals that brokerages and banks get all the benefits of secured, full-recourse loans, while customers take all the risk. This may seem acceptable in a healthy bull market, but it can be catastrophic to the pledged portfolio in a downturn.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>The following are some of the risks that investors may face if they borrow against an investment account. It’s these risks that prompted the SEC and FINRA to issue a special Investor Alert in 2015 regarding this type of lending:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li>If the value of the securities declines below a minimum level, you may be subject to a collateral “maintenance call” with little or no advanced warning, giving you minimal time to pay the loan or deposit more cash or securities in the account. Note that if this occurs, there are no extensions, and a broker can change its collateral maintenance requirement at any time without notifying you.</li><li>If you are unable to meet a maintenance call, the broker can liquidate part, or all, of your portfolio holdings at their discretion. You do not pick the stocks to sell. In a bear market, that could mean selling core holdings at a market bottom or alternatively realizing significant tax gains on long-held securities.</li><li>In a major downturn, you could be forced to forfeit all your pledged assets – in this case, the stocks, funds, and bonds in your portfolio. This is a major drawback to asset-backed loans…  In the worst-case scenario, you might lose more funds than are held in the collateral account, and as a full-recourse loan, you would be liable for any deficiency.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Why Goldman Sachs Seized a Client’s 217-Foot Yacht</strong></p><cite><em>Wall Street Journal - 8/10/17</em></cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:block {\"ref\":5343} /-->\n\n<!-- wp:paragraph -->\n<p></p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li>For SBLOCs, the interest rate on your loan is generally a floating rate that can change daily. With interest rates rising, the cost of your SBLOC could increase significantly.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:paragraph -->\n<p>The proliferation of SBLs and SBLOCs obviously increases the risks in this late-stage bull market. While history shows that excessive debt accumulation does not trigger a stock market peak, it can accelerate and intensify losses when the leverage starts to unwind in a bear market. Today’s levels of these securities-backed loans are small relative to overall consumer and business debt, but they can be dangerous. Like subprime mortgage loans 10 years ago, if trouble appears in terms of mass collateral maintenance calls, it could be just the tip of the iceberg.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:heading {\"level\":4} -->\n<h4>Excerpt from <em>InvesTech Research</em> - September 15, 2017</h4>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Also available in <a href=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/SBLs.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF format </a></p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p></p>\n<!-- /wp:paragraph -->','Securities-Backed Loans','Securities-Backed Loans… Just the Tip of the Iceberg?\n\nAging bull markets are naturally predisposed to excesses –particularly in debt and leverage– and once again nontraditional loans are taking center stage.','inherit','closed','closed','','2472-revision-v1','','','2021-07-20 22:32:40','2021-07-20 22:32:40','',2472,'https://ns2020-investech.investech.com/?p=9441',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9442,2,'2021-07-20 22:32:59','2021-07-20 22:32:59','<!-- wp:columns {\"verticalAlignment\":\"center\"} -->\n<div class=\"wp-block-columns are-vertically-aligned-center\"><!-- wp:column {\"verticalAlignment\":\"center\"} -->\n<div class=\"wp-block-column is-vertically-aligned-center\"><!-- wp:heading {\"className\":\"unclear\"} -->\n<h2 class=\"unclear\">Securities-Backed Loans… Just the Tip of the Iceberg?</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Aging bull markets are naturally predisposed to excesses –particularly in debt and leverage– and once again nontraditional loans are taking center stage.</p>\n<!-- /wp:paragraph --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"verticalAlignment\":\"center\"} -->\n<div class=\"wp-block-column is-vertically-aligned-center\"><!-- wp:image {\"id\":9428,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<figure class=\"wp-block-image size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/iceberg-4ReskwNsh68-unsplash-1024x576.jpg\" alt=\"\" class=\"wp-image-9428\"/><figcaption>Nine-tenths of an iceberg\'s volume is below the water</figcaption></figure>\n<!-- /wp:image --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Markets are relaxing merrily on a powerful time bomb</strong> - Stock and bond market leverage is everywhere.</p><cite><em>Business Insider – 7/30/17</em></cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:block {\"ref\":5343} /-->\n\n<!-- wp:paragraph -->\n<p>The article goes on to say, <em>\"Some of (this leverage) is transparent, such as NYSE margin debt which was $539 billion as of the June report. But the hottest form of stock and bond market leverage is opaque, offered by financial firms that usually don’t disclose the totals: securities-based loans (SBLs) – or “shadow margin” because no one knows how much of it there is.\"</em></p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>Innovative Lending Practices Make a Come-back</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>It’s been over 12 years since we warned about the highly questionable mortgage lending practices that mushroomed during the Housing Bubble. Now it appears that innovative lending is back in vogue. Securities-backed loans (SBLs) are among Wall Street’s hottest new products in this bull market, and they’ve been growing faster than Jack’s beanstalk over the past few years:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Borrowing With Stock Soars as Market Rises</strong></p><cite><em>Wall Street Journal, 7/28/17</em></cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Fidelity taps Goldman Sachs to expand lending services through RIAs</strong></p><cite><em>Investment News, 7/27/17</em></cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Goldman Sachs is launching a digital platform for the rich to borrow as much as $25 million</strong></p><cite><em>Reuters, 7/27/17</em></cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Wall Street Sharks Entice Customers With Securities-Backed Loans</strong></p><cite><em>Seeking Alpha, 8/13/17</em></cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:block {\"ref\":5343} /-->\n\n<!-- wp:paragraph -->\n<p>SBLs are often referred to as “shadow margin” because they’re not tracked in the margin debt figures, nor are they tracked by either the SEC or the brokerage regulator FINRA. Nobody knows how extensive such loans are, but based on anecdotal evidence they total at least $100 billion and we believe the figure could be much larger.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"left\",\"id\":9431,\"width\":512,\"height\":251,\"sizeSlug\":\"large\",\"linkDestination\":\"none\",\"className\":\"pushleft\"} -->\n<div class=\"wp-block-image pushleft\"><figure class=\"alignleft size-large is-resized\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Morgan-Stanley.png\" alt=\"\" class=\"wp-image-9431\" width=\"512\" height=\"251\"/><figcaption>Morgan Stanle<strong>y</strong> Advertisement</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>According to a July 2017 <em>Wall Street Journal</em> article, Bank of America’s wealth unit had $40 billion in outstanding securities-backed loans at the end of 2016, up 140% from 2010. Morgan Stanley had $30 billion in these loans, more than double the amount in 2013. And, not to be left behind, Goldman Sachs is teaming up with Fidelity and other brokerages to broaden the availability of credit via its new digital lending program, “GS Select.”</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>What are securities-backed loans (SBLs), and why are they popular?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:image {\"align\":\"right\",\"id\":9433,\"width\":506,\"height\":429,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"alignright size-large is-resized\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Wells-Fargo.png\" alt=\"\" class=\"wp-image-9433\" width=\"506\" height=\"429\"/><figcaption>Wells Fargo Advertisement</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>In simple terms, SBLs are loans that are marketed to investors as an easy and inexpensive way to access extra cash by borrowing against the securities in one’s investment portfolio without having to liquidate those holdings. Funds can be used for any purpose <strong><em>except </em></strong>buying more stock or repaying a margin loan. For instance, these loans might be used for buying real estate, investing in a business, funding education, or for personal use like taking a trip or paying for a wedding.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Fixed loans can run the gamut from $25,000 to $25 million or more, depending on the lender and the amount of collateral. A typical SBL agreement permits an investor to borrow from 50% to 95% of the value of the assets in his or her non-retirement investment account, based on the size of the portfolio and the types and mix of securities held. These lending arrangements can be set up as a fixed loan, but more often they’re established as a revolving SBL line of credit (SBLOC). It’s not uncommon for a firm to require that account assets have a market value of at least $100,000 to qualify for an SBLOC.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>The sales pitch is irresistible!</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Looking at the promotional materials shown in this report from broker websites touting SBLs, who wouldn’t want to avail themselves of this offering? According to the ads, you’ve worked hard to grow your investments over the years; now you can capitalize on those assets to finance your dreams without drawing down your portfolio.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"right\",\"id\":9432,\"width\":512,\"height\":376,\"sizeSlug\":\"large\",\"linkDestination\":\"none\",\"className\":\"pushright\"} -->\n<div class=\"wp-block-image pushright\"><figure class=\"alignright size-large is-resized\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/UBS-Wealth-Management-1024x751.png\" alt=\"\" class=\"wp-image-9432\" width=\"512\" height=\"376\"/><figcaption>UBS Advertisement</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>There are some of the benefits of establishing a securities-backed line of credit (SBLOC) being touted to potential customers:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li>With an SBLOC, the cash is readily available (up to the credit limits) any time you need it.</li><li>Other than securities related transactions, there are no restrictions on how you use the loan.</li><li>An SBLOC lets you keep your investment account intact, allowing it to continue to grow.</li><li>By borrowing to meet your cash needs, you can avoid selling securities and triggering capital gains taxes.</li><li>Because SBLs are backed by portfolio assets, interest rates can be much lower than traditional loans.</li><li>Once an SBLOC is in place, it can be used repeatedly <strong><em>and </em></strong>you’re only required to make monthly interest payments – there is no maturity date.</li><li>There are usually no fees to establish the loan or credit line and funds are available quickly. Goldman Sachs’ digital platform promotes a 24-hour turnaround.</li><li>Typically, no personal financial statements, tax returns, or other documents are required.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>What’s in it for the brokers?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:image {\"align\":\"right\",\"id\":9436,\"width\":512,\"height\":349,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"alignright size-large is-resized\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Goldman-Sachs-1024x698.png\" alt=\"\" class=\"wp-image-9436\" width=\"512\" height=\"349\"/><figcaption>Goldman Sachs Advertisement</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>SBLs and lines of credit have become lucrative new sources of income for brokerages, helping to replace revenue lost due to recent cuts in commission rates. In addition, brokers retain portfolio assets, along with their associated fees, as customers can access cash without making withdrawals. In some cases, establishing these loans may factor into a broker’s compensation, and marketing these credit options creates “sticky” clients as it’s hard to transfer assets to another broker with a securities-backed loan outstanding. Even if a client doesn’t use the line of credit immediately, the longer it’s in place, the more likely it is that he or she will eventually tap it.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>So, where’s the risk with SBLs?</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>With SBLs, as with all financial obligations, it’s vitally important to read the fine print or risks section before committing. Careful attention to this step reveals that brokerages and banks get all the benefits of secured, full-recourse loans, while customers take all the risk. This may seem acceptable in a healthy bull market, but it can be catastrophic to the pledged portfolio in a downturn.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>The following are some of the risks that investors may face if they borrow against an investment account. It’s these risks that prompted the SEC and FINRA to issue a special Investor Alert in 2015 regarding this type of lending:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li>If the value of the securities declines below a minimum level, you may be subject to a collateral “maintenance call” with little or no advanced warning, giving you minimal time to pay the loan or deposit more cash or securities in the account. Note that if this occurs, there are no extensions, and a broker can change its collateral maintenance requirement at any time without notifying you.</li><li>If you are unable to meet a maintenance call, the broker can liquidate part, or all, of your portfolio holdings at their discretion. You do not pick the stocks to sell. In a bear market, that could mean selling core holdings at a market bottom or alternatively realizing significant tax gains on long-held securities.</li><li>In a major downturn, you could be forced to forfeit all your pledged assets – in this case, the stocks, funds, and bonds in your portfolio. This is a major drawback to asset-backed loans…  In the worst-case scenario, you might lose more funds than are held in the collateral account, and as a full-recourse loan, you would be liable for any deficiency.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Why Goldman Sachs Seized a Client’s 217-Foot Yacht</strong></p><cite><em>Wall Street Journal - 8/10/17</em></cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:block {\"ref\":5343} /-->\n\n<!-- wp:paragraph -->\n<p></p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li>For SBLOCs, the interest rate on your loan is generally a floating rate that can change daily. With interest rates rising, the cost of your SBLOC could increase significantly.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:paragraph -->\n<p>The proliferation of SBLs and SBLOCs obviously increases the risks in this late-stage bull market. While history shows that excessive debt accumulation does not trigger a stock market peak, it can accelerate and intensify losses when the leverage starts to unwind in a bear market. Today’s levels of these securities-backed loans are small relative to overall consumer and business debt, but they can be dangerous. Like subprime mortgage loans 10 years ago, if trouble appears in terms of mass collateral maintenance calls, it could be just the tip of the iceberg.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:heading {\"level\":4} -->\n<h4>Excerpt from <em>InvesTech Research</em> - September 15, 2017</h4>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Also available in <a href=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/SBLs.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF format </a></p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p></p>\n<!-- /wp:paragraph -->','Securities-Backed Loans','Securities-Backed Loans… Just the Tip of the Iceberg?\n\nAging bull markets are naturally predisposed to excesses –particularly in debt and leverage– and once again nontraditional loans are taking center stage.','inherit','closed','closed','','2472-revision-v1','','','2021-07-20 22:32:59','2021-07-20 22:32:59','',2472,'https://ns2020-investech.investech.com/?p=9442',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9443,2,'2021-07-20 22:33:02','2021-07-20 22:33:02','<!-- wp:columns {\"verticalAlignment\":\"center\"} -->\n<div class=\"wp-block-columns are-vertically-aligned-center\"><!-- wp:column {\"verticalAlignment\":\"center\"} -->\n<div class=\"wp-block-column is-vertically-aligned-center\"><!-- wp:heading {\"className\":\"unclear\"} -->\n<h2 class=\"unclear\">Securities-Backed Loans… Just the Tip of the Iceberg?</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Aging bull markets are naturally predisposed to excesses –particularly in debt and leverage– and once again nontraditional loans are taking center stage.</p>\n<!-- /wp:paragraph --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"verticalAlignment\":\"center\"} -->\n<div class=\"wp-block-column is-vertically-aligned-center\"><!-- wp:image {\"id\":9428,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<figure class=\"wp-block-image size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/iceberg-4ReskwNsh68-unsplash-1024x576.jpg\" alt=\"\" class=\"wp-image-9428\"/><figcaption>Nine-tenths of an iceberg\'s volume is below the water</figcaption></figure>\n<!-- /wp:image --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Markets are relaxing merrily on a powerful time bomb</strong> - Stock and bond market leverage is everywhere.</p><cite><em>Business Insider – 7/30/17</em></cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:block {\"ref\":5343} /-->\n\n<!-- wp:paragraph -->\n<p>The article goes on to say, <em>\"Some of (this leverage) is transparent, such as NYSE margin debt which was $539 billion as of the June report. But the hottest form of stock and bond market leverage is opaque, offered by financial firms that usually don’t disclose the totals: securities-based loans (SBLs) – or “shadow margin” because no one knows how much of it there is.\"</em></p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>Innovative Lending Practices Make a Come-back</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>It’s been over 12 years since we warned about the highly questionable mortgage lending practices that mushroomed during the Housing Bubble. Now it appears that innovative lending is back in vogue. Securities-backed loans (SBLs) are among Wall Street’s hottest new products in this bull market, and they’ve been growing faster than Jack’s beanstalk over the past few years:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Borrowing With Stock Soars as Market Rises</strong></p><cite><em>Wall Street Journal, 7/28/17</em></cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Fidelity taps Goldman Sachs to expand lending services through RIAs</strong></p><cite><em>Investment News, 7/27/17</em></cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Goldman Sachs is launching a digital platform for the rich to borrow as much as $25 million</strong></p><cite><em>Reuters, 7/27/17</em></cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Wall Street Sharks Entice Customers With Securities-Backed Loans</strong></p><cite><em>Seeking Alpha, 8/13/17</em></cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:block {\"ref\":5343} /-->\n\n<!-- wp:paragraph -->\n<p>SBLs are often referred to as “shadow margin” because they’re not tracked in the margin debt figures, nor are they tracked by either the SEC or the brokerage regulator FINRA. Nobody knows how extensive such loans are, but based on anecdotal evidence they total at least $100 billion and we believe the figure could be much larger.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"left\",\"id\":9431,\"width\":512,\"height\":251,\"sizeSlug\":\"large\",\"linkDestination\":\"none\",\"className\":\"pushleft\"} -->\n<div class=\"wp-block-image pushleft\"><figure class=\"alignleft size-large is-resized\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Morgan-Stanley.png\" alt=\"\" class=\"wp-image-9431\" width=\"512\" height=\"251\"/><figcaption>Morgan Stanle<strong>y</strong> Advertisement</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>According to a July 2017 <em>Wall Street Journal</em> article, Bank of America’s wealth unit had $40 billion in outstanding securities-backed loans at the end of 2016, up 140% from 2010. Morgan Stanley had $30 billion in these loans, more than double the amount in 2013. And, not to be left behind, Goldman Sachs is teaming up with Fidelity and other brokerages to broaden the availability of credit via its new digital lending program, “GS Select.”</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>What are securities-backed loans (SBLs), and why are they popular?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:image {\"align\":\"right\",\"id\":9433,\"width\":506,\"height\":429,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"alignright size-large is-resized\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Wells-Fargo.png\" alt=\"\" class=\"wp-image-9433\" width=\"506\" height=\"429\"/><figcaption>Wells Fargo Advertisement</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>In simple terms, SBLs are loans that are marketed to investors as an easy and inexpensive way to access extra cash by borrowing against the securities in one’s investment portfolio without having to liquidate those holdings. Funds can be used for any purpose <strong><em>except </em></strong>buying more stock or repaying a margin loan. For instance, these loans might be used for buying real estate, investing in a business, funding education, or for personal use like taking a trip or paying for a wedding.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Fixed loans can run the gamut from $25,000 to $25 million or more, depending on the lender and the amount of collateral. A typical SBL agreement permits an investor to borrow from 50% to 95% of the value of the assets in his or her non-retirement investment account, based on the size of the portfolio and the types and mix of securities held. These lending arrangements can be set up as a fixed loan, but more often they’re established as a revolving SBL line of credit (SBLOC). It’s not uncommon for a firm to require that account assets have a market value of at least $100,000 to qualify for an SBLOC.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>The sales pitch is irresistible!</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Looking at the promotional materials shown in this report from broker websites touting SBLs, who wouldn’t want to avail themselves of this offering? According to the ads, you’ve worked hard to grow your investments over the years; now you can capitalize on those assets to finance your dreams without drawing down your portfolio.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"right\",\"id\":9432,\"width\":512,\"height\":376,\"sizeSlug\":\"large\",\"linkDestination\":\"none\",\"className\":\"pushright\"} -->\n<div class=\"wp-block-image pushright\"><figure class=\"alignright size-large is-resized\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/UBS-Wealth-Management-1024x751.png\" alt=\"\" class=\"wp-image-9432\" width=\"512\" height=\"376\"/><figcaption>UBS Advertisement</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>There are some of the benefits of establishing a securities-backed line of credit (SBLOC) being touted to potential customers:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li>With an SBLOC, the cash is readily available (up to the credit limits) any time you need it.</li><li>Other than securities related transactions, there are no restrictions on how you use the loan.</li><li>An SBLOC lets you keep your investment account intact, allowing it to continue to grow.</li><li>By borrowing to meet your cash needs, you can avoid selling securities and triggering capital gains taxes.</li><li>Because SBLs are backed by portfolio assets, interest rates can be much lower than traditional loans.</li><li>Once an SBLOC is in place, it can be used repeatedly <strong><em>and </em></strong>you’re only required to make monthly interest payments – there is no maturity date.</li><li>There are usually no fees to establish the loan or credit line and funds are available quickly. Goldman Sachs’ digital platform promotes a 24-hour turnaround.</li><li>Typically, no personal financial statements, tax returns, or other documents are required.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>What’s in it for the brokers?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:image {\"align\":\"right\",\"id\":9436,\"width\":512,\"height\":349,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"alignright size-large is-resized\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Goldman-Sachs-1024x698.png\" alt=\"\" class=\"wp-image-9436\" width=\"512\" height=\"349\"/><figcaption>Goldman Sachs Advertisement</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>SBLs and lines of credit have become lucrative new sources of income for brokerages, helping to replace revenue lost due to recent cuts in commission rates. In addition, brokers retain portfolio assets, along with their associated fees, as customers can access cash without making withdrawals. In some cases, establishing these loans may factor into a broker’s compensation, and marketing these credit options creates “sticky” clients as it’s hard to transfer assets to another broker with a securities-backed loan outstanding. Even if a client doesn’t use the line of credit immediately, the longer it’s in place, the more likely it is that he or she will eventually tap it.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>So, where’s the risk with SBLs?</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>With SBLs, as with all financial obligations, it’s vitally important to read the fine print or risks section before committing. Careful attention to this step reveals that brokerages and banks get all the benefits of secured, full-recourse loans, while customers take all the risk. This may seem acceptable in a healthy bull market, but it can be catastrophic to the pledged portfolio in a downturn.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>The following are some of the risks that investors may face if they borrow against an investment account. It’s these risks that prompted the SEC and FINRA to issue a special Investor Alert in 2015 regarding this type of lending:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li>If the value of the securities declines below a minimum level, you may be subject to a collateral “maintenance call” with little or no advanced warning, giving you minimal time to pay the loan or deposit more cash or securities in the account. Note that if this occurs, there are no extensions, and a broker can change its collateral maintenance requirement at any time without notifying you.</li><li>If you are unable to meet a maintenance call, the broker can liquidate part, or all, of your portfolio holdings at their discretion. You do not pick the stocks to sell. In a bear market, that could mean selling core holdings at a market bottom or alternatively realizing significant tax gains on long-held securities.</li><li>In a major downturn, you could be forced to forfeit all your pledged assets – in this case, the stocks, funds, and bonds in your portfolio. This is a major drawback to asset-backed loans…  In the worst-case scenario, you might lose more funds than are held in the collateral account, and as a full-recourse loan, you would be liable for any deficiency.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Why Goldman Sachs Seized a Client’s 217-Foot Yacht</strong></p><cite><em>Wall Street Journal - 8/10/17</em></cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:block {\"ref\":5343} /-->\n\n<!-- wp:paragraph -->\n<p></p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li>For SBLOCs, the interest rate on your loan is generally a floating rate that can change daily. With interest rates rising, the cost of your SBLOC could increase significantly.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:paragraph -->\n<p>The proliferation of SBLs and SBLOCs obviously increases the risks in this late-stage bull market. While history shows that excessive debt accumulation does not trigger a stock market peak, it can accelerate and intensify losses when the leverage starts to unwind in a bear market. Today’s levels of these securities-backed loans are small relative to overall consumer and business debt, but they can be dangerous. Like subprime mortgage loans 10 years ago, if trouble appears in terms of mass collateral maintenance calls, it could be just the tip of the iceberg.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:heading {\"level\":4} -->\n<h4>Excerpt from <em>InvesTech Research</em> - September 15, 2017</h4>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Also available in <a href=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/SBLs.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF format </a></p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p></p>\n<!-- /wp:paragraph -->','Securities-Backed Loans','Securities-Backed Loans… Just the Tip of the Iceberg?\n\nAging bull markets are naturally predisposed to excesses –particularly in debt and leverage– and once again nontraditional loans are taking center stage.','inherit','closed','closed','','2472-revision-v1','','','2021-07-20 22:33:02','2021-07-20 22:33:02','',2472,'https://ns2020-investech.investech.com/?p=9443',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9445,2,'2021-07-20 22:37:40','2021-07-20 22:37:40','<!-- wp:columns {\"verticalAlignment\":\"center\"} -->\n<div class=\"wp-block-columns are-vertically-aligned-center\"><!-- wp:column {\"verticalAlignment\":\"center\"} -->\n<div class=\"wp-block-column is-vertically-aligned-center\"><!-- wp:heading {\"className\":\"unclear\"} -->\n<h2 class=\"unclear\">Securities-Backed Loans… Just the Tip of the Iceberg?</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Aging bull markets are naturally predisposed to excesses –particularly in debt and leverage– and once again nontraditional loans are taking center stage.</p>\n<!-- /wp:paragraph --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"verticalAlignment\":\"center\"} -->\n<div class=\"wp-block-column is-vertically-aligned-center\"><!-- wp:image {\"id\":9428,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<figure class=\"wp-block-image size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/iceberg-4ReskwNsh68-unsplash-1024x576.jpg\" alt=\"\" class=\"wp-image-9428\"/><figcaption>Nine-tenths of an iceberg\'s volume is below the water</figcaption></figure>\n<!-- /wp:image --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Markets are relaxing merrily on a powerful time bomb</strong> - Stock and bond market leverage is everywhere.</p><cite><em>Business Insider – 7/30/17</em></cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:block {\"ref\":5343} /-->\n\n<!-- wp:paragraph -->\n<p>The article goes on to say, <em>\"Some of (this leverage) is transparent, such as NYSE margin debt which was $539 billion as of the June report. But the hottest form of stock and bond market leverage is opaque, offered by financial firms that usually don’t disclose the totals: securities-based loans (SBLs) – or “shadow margin” because no one knows how much of it there is.\"</em></p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>Innovative Lending Practices Make a Come-back</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>It’s been over 12 years since we warned about the highly questionable mortgage lending practices that mushroomed during the Housing Bubble. Now it appears that innovative lending is back in vogue. Securities-backed loans (SBLs) are among Wall Street’s hottest new products in this bull market, and they’ve been growing faster than Jack’s beanstalk over the past few years:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Borrowing With Stock Soars as Market Rises</strong></p><cite><em>Wall Street Journal, 7/28/17</em></cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Fidelity taps Goldman Sachs to expand lending services through RIAs</strong></p><cite><em>Investment News, 7/27/17</em></cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Goldman Sachs is launching a digital platform for the rich to borrow as much as $25 million</strong></p><cite><em>Reuters, 7/27/17</em></cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Wall Street Sharks Entice Customers With Securities-Backed Loans</strong></p><cite><em>Seeking Alpha, 8/13/17</em></cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:block {\"ref\":5343} /-->\n\n<!-- wp:paragraph -->\n<p>SBLs are often referred to as “shadow margin” because they’re not tracked in the margin debt figures, nor are they tracked by either the SEC or the brokerage regulator FINRA. Nobody knows how extensive such loans are, but based on anecdotal evidence they total at least $100 billion and we believe the figure could be much larger.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"left\",\"id\":9431,\"width\":512,\"height\":251,\"sizeSlug\":\"large\",\"linkDestination\":\"none\",\"className\":\"pushleft\"} -->\n<div class=\"wp-block-image pushleft\"><figure class=\"alignleft size-large is-resized\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Morgan-Stanley.png\" alt=\"\" class=\"wp-image-9431\" width=\"512\" height=\"251\"/><figcaption>Morgan Stanle<strong>y</strong> Advertisement</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>According to a July 2017 <em>Wall Street Journal</em> article, Bank of America’s wealth unit had $40 billion in outstanding securities-backed loans at the end of 2016, up 140% from 2010. Morgan Stanley had $30 billion in these loans, more than double the amount in 2013. And, not to be left behind, Goldman Sachs is teaming up with Fidelity and other brokerages to broaden the availability of credit via its new digital lending program, “GS Select.”</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>What are securities-backed loans (SBLs), and why are they popular?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:image {\"align\":\"right\",\"id\":9433,\"width\":506,\"height\":429,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"alignright size-large is-resized\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Wells-Fargo.png\" alt=\"\" class=\"wp-image-9433\" width=\"506\" height=\"429\"/><figcaption>Wells Fargo Advertisement</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>In simple terms, SBLs are loans that are marketed to investors as an easy and inexpensive way to access extra cash by borrowing against the securities in one’s investment portfolio without having to liquidate those holdings. Funds can be used for any purpose <strong><em>except </em></strong>buying more stock or repaying a margin loan. For instance, these loans might be used for buying real estate, investing in a business, funding education, or for personal use like taking a trip or paying for a wedding.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Fixed loans can run the gamut from $25,000 to $25 million or more, depending on the lender and the amount of collateral. A typical SBL agreement permits an investor to borrow from 50% to 95% of the value of the assets in his or her non-retirement investment account, based on the size of the portfolio and the types and mix of securities held. These lending arrangements can be set up as a fixed loan, but more often they’re established as a revolving SBL line of credit (SBLOC). It’s not uncommon for a firm to require that account assets have a market value of at least $100,000 to qualify for an SBLOC.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>The sales pitch is irresistible!</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Looking at the promotional materials shown in this report from broker websites touting SBLs, who wouldn’t want to avail themselves of this offering? According to the ads, you’ve worked hard to grow your investments over the years; now you can capitalize on those assets to finance your dreams without drawing down your portfolio.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"right\",\"id\":9432,\"width\":512,\"height\":376,\"sizeSlug\":\"large\",\"linkDestination\":\"none\",\"className\":\"pushright\"} -->\n<div class=\"wp-block-image pushright\"><figure class=\"alignright size-large is-resized\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/UBS-Wealth-Management-1024x751.png\" alt=\"\" class=\"wp-image-9432\" width=\"512\" height=\"376\"/><figcaption>UBS Advertisement</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>There are some of the benefits of establishing a securities-backed line of credit (SBLOC) being touted to potential customers:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li>With an SBLOC, the cash is readily available (up to the credit limits) any time you need it.</li><li>Other than securities related transactions, there are no restrictions on how you use the loan.</li><li>An SBLOC lets you keep your investment account intact, allowing it to continue to grow.</li><li>By borrowing to meet your cash needs, you can avoid selling securities and triggering capital gains taxes.</li><li>Because SBLs are backed by portfolio assets, interest rates can be much lower than traditional loans.</li><li>Once an SBLOC is in place, it can be used repeatedly <strong><em>and </em></strong>you’re only required to make monthly interest payments – there is no maturity date.</li><li>There are usually no fees to establish the loan or credit line and funds are available quickly. Goldman Sachs’ digital platform promotes a 24-hour turnaround.</li><li>Typically, no personal financial statements, tax returns, or other documents are required.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>What’s in it for the brokers?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:image {\"align\":\"right\",\"id\":9436,\"width\":512,\"height\":349,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"alignright size-large is-resized\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Goldman-Sachs-1024x698.png\" alt=\"\" class=\"wp-image-9436\" width=\"512\" height=\"349\"/><figcaption>Goldman Sachs Advertisement</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>SBLs and lines of credit have become lucrative new sources of income for brokerages, helping to replace revenue lost due to recent cuts in commission rates. In addition, brokers retain portfolio assets, along with their associated fees, as customers can access cash without making withdrawals. In some cases, establishing these loans may factor into a broker’s compensation, and marketing these credit options creates “sticky” clients as it’s hard to transfer assets to another broker with a securities-backed loan outstanding. Even if a client doesn’t use the line of credit immediately, the longer it’s in place, the more likely it is that he or she will eventually tap it.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>So, where’s the risk with SBLs?</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>With SBLs, as with all financial obligations, it’s vitally important to read the fine print or risks section before committing. Careful attention to this step reveals that brokerages and banks get all the benefits of secured, full-recourse loans, while customers take all the risk. This may seem acceptable in a healthy bull market, but it can be catastrophic to the pledged portfolio in a downturn.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>The following are some of the risks that investors may face if they borrow against an investment account. It’s these risks that prompted the SEC and FINRA to issue a special Investor Alert in 2015 regarding this type of lending:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li>If the value of the securities declines below a minimum level, you may be subject to a collateral “maintenance call” with little or no advanced warning, giving you minimal time to pay the loan or deposit more cash or securities in the account. Note that if this occurs, there are no extensions, and a broker can change its collateral maintenance requirement at any time without notifying you.</li><li>If you are unable to meet a maintenance call, the broker can liquidate part, or all, of your portfolio holdings at their discretion. You do not pick the stocks to sell. In a bear market, that could mean selling core holdings at a market bottom or alternatively realizing significant tax gains on long-held securities.</li><li>In a major downturn, you could be forced to forfeit all your pledged assets – in this case, the stocks, funds, and bonds in your portfolio. This is a major drawback to asset-backed loans…  In the worst-case scenario, you might lose more funds than are held in the collateral account, and as a full-recourse loan, you would be liable for any deficiency.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Why Goldman Sachs Seized a Client’s 217-Foot Yacht</strong></p><cite><em>Wall Street Journal - 8/10/17</em></cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:block {\"ref\":5343} /-->\n\n<!-- wp:paragraph -->\n<p></p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li>For SBLOCs, the interest rate on your loan is generally a floating rate that can change daily. With interest rates rising, the cost of your SBLOC could increase significantly.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:paragraph -->\n<p>The proliferation of SBLs and SBLOCs obviously increases the risks in this late-stage bull market. While history shows that excessive debt accumulation does not trigger a stock market peak, it can accelerate and intensify losses when the leverage starts to unwind in a bear market. Today’s levels of these securities-backed loans are small relative to overall consumer and business debt, but they can be dangerous. Like subprime mortgage loans 10 years ago, if trouble appears in terms of mass collateral maintenance calls, it could be just the tip of the iceberg.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:heading {\"level\":4} -->\n<h4>Excerpt from <em>InvesTech Research</em> - September 15, 2017</h4>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Also available in <a href=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/SBLs.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF format </a></p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p></p>\n<!-- /wp:paragraph -->','Securities-Backed Loans','Securities-Backed Loans… Just the Tip of the Iceberg?\n\nAging bull markets are naturally predisposed to excesses –particularly in debt and leverage– and once again nontraditional loans are taking center stage.','inherit','closed','closed','','2472-revision-v1','','','2021-07-20 22:37:40','2021-07-20 22:37:40','',2472,'https://ns2020-investech.investech.com/?p=9445',0,'revision','',0);
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INSERT INTO `wp_posts` VALUES (9448,2,'2021-07-20 22:40:12','2021-07-20 22:40:12','<!-- wp:media-text {\"mediaPosition\":\"right\",\"mediaId\":9447,\"mediaLink\":\"https://ns2020-investech.investech.com/?attachment_id=9447\",\"mediaType\":\"image\",\"mediaWidth\":38} -->\n<div class=\"wp-block-media-text alignwide has-media-on-the-right is-stacked-on-mobile\" style=\"grid-template-columns:auto 38%\"><figure class=\"wp-block-media-text__media\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/rollercoaster-qac9Q3pWHWg-unsplash.jpg\" alt=\"\" class=\"wp-image-9447 size-full\"/></figure><div class=\"wp-block-media-text__content\"><!-- wp:heading -->\n<h2>Tempted by high-flying ETFs in this aging bull market? </h2>\n<!-- /wp:heading -->\n\n<!-- wp:heading -->\n<h2>Just remember… Excitement is highest as the roller coaster goes over the top!</h2>\n<!-- /wp:heading --></div></div>\n<!-- /wp:media-text -->\n\n<!-- wp:paragraph -->\n<p>In today’s technologically advanced world, featuring self-driving cars, pilotless airplanes, and smart homes, a “hands-off” trend is also gaining popularity among the investing public. As indicated by the headlines below, passive index investing has become all the rage, and Exchange Traded Funds (ETFs) are the tool of choice:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column {\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:66.66%\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>ETFs could see $1 trillion in inflows over the coming year</strong></p><cite>MarketWatch, 1/31/17</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:33.33%\"></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column {\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:33.33%\"></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:66.66%\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Small investors’ move to ‘passive’ stock funds becomes a stampede</strong> </p><cite>LA Times, 4/9/17</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column {\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:66.66%\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Global ETF assets reach $4tn</strong> </p><p><em>The global exchange traded fund industry smashed past $4tn in assets last month…</em> </p><cite>Financial Times, 5/10/17</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:33.33%\"></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns {\"verticalAlignment\":\"center\"} -->\n<div class=\"wp-block-columns are-vertically-aligned-center\"><!-- wp:column {\"verticalAlignment\":\"center\",\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column is-vertically-aligned-center\" style=\"flex-basis:33.33%\"><!-- wp:paragraph {\"placeholder\":\"Content…\"} -->\n<p>And our personal favorite...</p>\n<!-- /wp:paragraph --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"verticalAlignment\":\"center\",\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column is-vertically-aligned-center\" style=\"flex-basis:66.66%\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Wheee! A Quadruple-Leveraged S&amp;P 500 ETF is Here</strong></p><cite>Barron\'s, 5/3/17</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column -->\n<div class=\"wp-block-column\"><!-- wp:heading {\"level\":3} -->\n<h3>Exchange Traded Fund (ETF)</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The first Exchange Traded Fund (ETF) was launched in 1993, and although they were slow to start, ETFs have proliferated over the last decade, both in number (see graph at right) and the variety of index funds available. There’s now an ETF for nearly every strategy, no matter how esoteric, and that has helped fuel the passive investing craze.</p>\n<!-- /wp:paragraph --></div>\n<!-- /wp:column -->\n\n<!-- wp:column -->\n<div class=\"wp-block-column\"><!-- wp:image {\"align\":\"center\",\"id\":4829,\"sizeSlug\":\"full\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-full\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2020/12/number-of-etfs.png\" alt=\"Graph showing the number of ETFs (registered in the U.S.), Source: Investment Company Institute\" class=\"wp-image-4829\"/><figcaption>Number of ETFs (registered in the U.S.), Source: Investment Company Institute</figcaption></figure></div>\n<!-- /wp:image --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:paragraph -->\n<p>Over the past 24 years, one can see the shift in interest from actively managed mutual funds toward passive investing. As shown in the graph below, net cash flows into actively managed funds were still four times larger than passive funds from 1993 through 2000. From 2001 through 2008, a change becomes evident as net cash flows for active funds turned negative while passive funds continued to grow. The disparity between the active and passive net cash flows during the current bull market (2009-2016) is remarkable, and it shows why there’s been a parabolic increase in the number of ETFs!</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":4831,\"width\":713,\"height\":397} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2020/12/Active-vs-Passive-Stock-Funds-Inflows.png\" alt=\"Graph showing net cash flows into actively managed funds between 1993 and 2016.\" class=\"wp-image-4831\" width=\"713\" height=\"397\"/><figcaption>Active vs. Passive Domestic Stock Funds; Source: Investment Company Institute</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3><strong>So, why has passive investing become all the rage in recent years?</strong></h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Many investors have been burned –not once, but twice– by the Tech Bubble of the 1990s and the Housing Bubble in 2007. Also, they are frustrated with the challenges of managing investments… a task that in this uncertain bull market has frequently seemed counterproductive.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>The most popular index funds are touted as low-cost and broadly diversified, with a portfolio full of blue chip stocks. Moreover, ETFs offer “instant liquidity” with intraday trading compared to mutual funds that only settle at the end of each trading day. To the average investor, passive funds with minimal fees, implied safety, and lots of liquidity may appear to be the Holy Grail. As we’ll see, however, there is more to the story…</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:quote {\"align\":\"center\",\"className\":\"is-style-default\"} -->\n<blockquote class=\"wp-block-quote has-text-align-center is-style-default\"><p>Excitement is Highest as the Roller Coaster Goes Over the Top.</p><cite>– Anonymous</cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:media-text {\"mediaPosition\":\"right\",\"mediaId\":4839,\"mediaType\":\"image\",\"mediaWidth\":43,\"verticalAlignment\":\"center\"} -->\n<div class=\"wp-block-media-text alignwide has-media-on-the-right is-stacked-on-mobile is-vertically-aligned-center\" style=\"grid-template-columns:auto 43%\"><figure class=\"wp-block-media-text__media\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2020/12/Total-Assets-Domestic-Equity-Index-Funds.png\" alt=\"Graph showing the total assets in Domestic Equity Index Funds, 1990\'s to 2016\" class=\"wp-image-4839 size-full\"/></figure><div class=\"wp-block-media-text__content\"><!-- wp:paragraph -->\n<p>Just as the number of ETFs has grown, the past few years have witnessed an explosion in assets tied to passive investing that has extended to both mutual funds and ETFs (as shown in graph at right). A large part of the growth has been in ETFs, which are poised to overtake index mutual funds as the preferred indexing vehicle. Both types of products have doubled in assets just since 2012.</p>\n<!-- /wp:paragraph --></div></div>\n<!-- /wp:media-text -->\n\n<!-- wp:paragraph -->\n<p>It is important to recognize that passive investing is not a fresh new idea; in fact, the concept was introduced by John Bogle (the founder of Vanguard) in the 1970s. This strategy has shifted in and out of favor, becoming more popular as bull markets age and losing its luster only after the damage has been done by the next bear market. Just like riding a roller coaster, the peak in public enthusiasm often comes as the bull market is cresting the top.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>A Trip Back in Time…</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The rise in the popularity of index funds has been seen before.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:quote {\"align\":\"center\"} -->\n<blockquote class=\"wp-block-quote has-text-align-center\"><p>It’s like deja vu all over again.</p><cite>- Yogi Berra</cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>The late 1990s: </h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>As the decade of the 1990s became the longest bull market in Wall Street history, the Tech Bubble wasn’t the only phenomenon catching investors’ attention. In 1998-99, headlines were touting the benefit of index investing as inflows reached record levels:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column -->\n<div class=\"wp-block-column\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><em>Saving for Retirement</em> <strong>Index Fever</strong></p><cite> Fortune, 11/9/98</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column -->\n\n<!-- wp:column -->\n<div class=\"wp-block-column\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Who Needs a Money Manager?</strong></p><cite>Business Week 2/22/99</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns {\"verticalAlignment\":\"center\"} -->\n<div class=\"wp-block-columns are-vertically-aligned-center\"><!-- wp:column {\"verticalAlignment\":\"center\",\"width\":\"\"} -->\n<div class=\"wp-block-column is-vertically-aligned-center\"><!-- wp:paragraph -->\n<p>In March 1999, InvesTech Research published the issue shown at right, <a href=\"https://ns2020-investech.investech.com/subscriber-library/lemming-principle/\">comparing the emotional influx of index investors to lemmings</a>. However, instead of falling off a cliff, index investors fell into the largest bear market since the 1930s (the S&amp;P 500 Index lost -49.1%).</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>2006-07:</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p><strong>Fast-forward to 2006-07:</strong> Index investing was even <em>more</em> popular at the peak of the last bull market (also one of the longer bull markets of the past 80 years):</p>\n<!-- /wp:paragraph --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"verticalAlignment\":\"center\",\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column is-vertically-aligned-center\" style=\"flex-basis:33.33%\"><!-- wp:image {\"align\":\"center\",\"id\":4840,\"width\":195,\"height\":201,\"sizeSlug\":\"medium\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-medium is-resized\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2020/12/V99I04-216x300.png\" alt=\"InvesTech Research newsletter, &quot;The Lemming Principle,&quot; March 12, 1999\" class=\"wp-image-4840\" width=\"195\" height=\"201\"/><figcaption>InvesTech Research newsletter, \"The Lemming Principle,\" March 12, 1999</figcaption></figure></div>\n<!-- /wp:image --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column {\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:66.66%\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Index Funds: So Hot Right Now</strong></p><cite>The Motley Fool, 12/11/06</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:33.33%\"></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column {\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:33.33%\"></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:66.66%\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Index funds help you avoid risks of stock selection, market timing</strong></p><cite>Boston Globe, 2/27/07</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column {\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:66.66%\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Owning the S&amp;P 500 is cheap, easy and smart</strong></p><cite>USA Today, 7/20/07</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:33.33%\"></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:block {\"ref\":5343} /-->\n\n<!-- wp:paragraph -->\n<p>In these previous periods, much like today, most investors perceived index funds – particularly the S&amp;P 500 Index funds – to be more diversified, safer investments.  We’ll discuss why index funds may not be all they’re thought to be…</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>The Dark Side of Passive Investing – Live by the Index, Die by the Index</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>As noted, history shows that index investing reaches the highest level of popularity in aging bull markets or near market peaks. The reason for this is that any type of “risk management” during a bull market tends to reduce or moderate a fund manager’s return. Consequently, it is not uncommon for a fully invested S&amp;P 500 Index fund to outperform most actively managed mutual funds and money managers when measured <em><strong>solely </strong></em>over the duration of a bull market.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>There are multiple reasons index or passive investing becomes more popular in an aging bull market. First, it is more comfortable. One doesn’t have the burden of making decisions about which stocks to invest in, or when to sell a stock if it rises or falls precipitously. Indexing also tends to remove the regret from bad decisions, because any loss can be attributed entirely to the market. Lastly, investing in an index fund is the cheapest and easiest way to take advantage of the market’s stellar gains which <em><strong>seem </strong></em>likely to continue. Yet before jumping into the indexing mania today, consider these inherent risks in passive investing…</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li><strong>By definition, index funds also guarantee that you will suffer 100% of the next bear market’s decline.</strong> Regardless of which index you are matching, the index fund is required to stay fully invested regardless of market risk or volatility.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li><strong>Assets flowing into the most popular index funds are funneling investments into the largest and most overvalued stocks in the market, driving them higher. </strong>The S&amp;P 500 is a capitalization weighted index, so money invested into these popular index funds is not evenly distributed in all 500 stocks. Rather, the largest companies by market cap receive a disproportionate amount of the investment. As a result, investors must take the good with the bad and favor the largest companies within the basket of 500 stocks, regardless of valuation and financial strength (or lack thereof).</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li><strong>Market volatility increases when interest narrows to the index heavyweights. </strong>Only 50 stocks account for nearly 50% of S&amp;P 500 capitalization and one-half of an index fund’s portfolio. Additionally, the top 10 largest stocks comprise over 20% of the Index. As a result, downside risk in the next bear market could increase if selling pressure hits the largest stocks at the same time. The increased focus on index investing of late may very well increase both the size of, and speed at which the next bear market decline occurs.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:image {\"align\":\"right\",\"id\":8324,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"alignright size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/06/iShares-Core-SP-500-ETF.jpg\" alt=\"\" class=\"wp-image-8324\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li><strong>Intraday liquidity for ETFs can experience dramatic structural challenges in times of market distress. </strong>For example, during the market dislocation on August 24, 2015 the liquidity of most ETFs all but dried up just as the market opened. A confluence of problems –including circuit breakers, an obscure NYSE rule allowing market makers to delay posting prices, and a lack of futures data for large hedgers– all combined to take the bid out of the ETF space. Even large, well-established ETFs like the $116 billion iShares Core S&amp;P 500 ETF (IVV) saw unprecedented declines. As shown on the graph at right, IVV fell -26% on the open, far more than the -5.3% drop of the underlying S&amp;P 500. As a result of this liquidity hiccup, or “flash crash” as it was called at the time, investors with outstanding market orders and stop-loss orders sold their shares in IVV for far less than their worth.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Bottom Line</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The broad diversification and implied liquidity offered by index ETFs gives many investors a false sense of security. When passively investing in an index, devoid of risk management, investors are still subject to varying degrees of valuation and liquidity risk, and they bear the full brunt of cyclical market risk.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>Risk Management is Vital to any Strategy – <em>Ignore at your own peril!</em></h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Many actively managed mutual funds and money managers take some steps to mitigate portfolio risk – at times to the detriment of bull market performance. Although passive indexing may appear to be easier and is also perceived to reduce risk, it ends up having the opposite effect during major downturns as it guarantees an investor will experience <strong><em>all </em></strong>of the losses in the corresponding market index. Remember, long-term performance is dependent not only on how much you make in the bull markets, but also how much you give back in the bear markets. Investments that are weighted toward the largest, most overvalued stocks and sectors are exactly the opposite of what might be used in a strategy that manages risk.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Index investing proponents generally downplay stock market cycles, but bear market survivability is a very real issue for many investors, particularly those in or nearing retirement. The decision to hold the course on an investment strategy usually depends on the severity of bear market losses and how long one’s portfolio remains underwater… in other words, how much time it takes to recover those losses.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>To effectively demonstrate this concept, the <strong>Ulcer Index </strong>was developed in 1987 by Peter Martin to measure the depth and duration of drawdowns from earlier highs in one’s portfolio. It provides a graphic illustration of the level of stress and ulcers (hence the name) that can emerge from suffering deep, prolonged losses in one’s retirement savings.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Shown below are the comparative Ulcer Index graphs of the InvesTech Model Portfolio versus the Vanguard Total Stock Market Index (VTSMX), which is the largest and most popular fund on the market today.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":8329,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/06/IT-Portfolio-vs-Vanguard-Ulcer-Index.jpg\" alt=\"\" class=\"wp-image-8329\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>The starts of the last two bear markets are noted in March 2000 and October 2007, as well as their subsequent market bottoms in October 2002 and March 2009. The green dashed lines illustrate the number of months required after the market bottom for one’s portfolio to recover the losses. Above all, the red shaded areas designate how long, and how deep one’s portfolio was underwater. These are the so-called “ulcer” zones when an investor must wait and wonder how long it will be before his portfolio is whole again.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>As you’ll note, InvesTech’s “risk management” strategy dramatically reduced the stress of the last two generational bear markets by limiting the time spent in the “ulcer” zones. While the InvesTech Model Portfolio didn’t outperform the Vanguard Total Stock Market Index Fund in the bull markets, our ability to manage and reduce risk provided a long-term return which more than doubled that of the Vanguard index fund. More importantly, InvesTech subscribers lost significantly less and recovered much more quickly during bear markets, avoiding the urge to panic out of the market at the wrong time.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>It is this combination of achieving safe returns and managing downside risk that matters most in the long-term performance of one’s portfolio… and in the survivability of bear markets.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:uagb/inline-notice {\"block_id\":\"d8f90386\",\"noticeContent\":\"\\u003cp\\u003ePast performance may not be indicative of future results. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended by InvesTech Research) will be profitable, equal any historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  \\u003ca href=\\u0022https://ns2020-investech.investech.com/terms-of-use/\\u0022 target=\\u0022_blank\\u0022 rel=\\u0022noreferrer noopener\\u0022\\u003eRead full Disclosures here\\u003c/a\\u003e\\u003ca href=\\u0022http://Past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk.  Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended by InvesTech Research) will be profitable, equal any historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.\\u0022 target=\\u0022_blank\\u0022 rel=\\u0022noreferrer noopener\\u0022\\u003e.\\u003c/a\\u003e\\u003c/p\\u003e\"} -->\n<div class=\"wp-block-uagb-inline-notice uagb-inline_notice__outer-wrap uagb-inline_notice__align-left uagb-block-d8f90386\"><h4 class=\"uagb-notice-title\">Important Disclosure Information</h4><div class=\"uagb-notice-text\"><p>Past performance may not be indicative of future results. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended by InvesTech Research) will be profitable, equal any historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  <a href=\"https://ns2020-investech.investech.com/terms-of-use/\" target=\"_blank\" rel=\"noreferrer noopener\">Read full Disclosures here</a><a href=\"http://Past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk.  Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended by InvesTech Research) will be profitable, equal any historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.\" target=\"_blank\" rel=\"noreferrer noopener\">.</a></p></div></div>\n<!-- /wp:uagb/inline-notice -->\n\n<!-- wp:spacer {\"height\":33} -->\n<div style=\"height:33px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:spacer {\"height\":33} -->\n<div style=\"height:33px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:spacer {\"height\":33} -->\n<div style=\"height:33px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:heading {\"level\":4} -->\n<h4>Excerpt from <em>InvesTech Research</em> - June 16, 2017</h4>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>This report is also available to <a href=\"https://ns2020-investech.investech.com/wp-content/uploads/2020/08/IndexingFever.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">read in PDF format. </a></p>\n<!-- /wp:paragraph -->','Passive Investing: Inevitable Black Eye','Tempted by high-flying ETFs in this aging bull market? Just remember… Excitement is highest as the roller coaster goes over the top! In today’s technologically advanced world, featuring self-driving cars, pilotless airplanes, and smart homes, a “hands-off” trend is also gaining popularity among the investing public.','inherit','closed','closed','','2468-revision-v1','','','2021-07-20 22:40:12','2021-07-20 22:40:12','',2468,'https://ns2020-investech.investech.com/?p=9448',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9450,2,'2021-07-20 22:41:02','2021-07-20 22:41:02','','rollercoaster-qac9Q3pWHWg-unsplash','','inherit','closed','closed','','rollercoaster-qac9q3pwhwg-unsplash','','','2021-07-20 22:41:02','2021-07-20 22:41:02','',2468,'https://ns2020-investech.investech.com/wp-content/uploads/2017/06/rollercoaster-qac9Q3pWHWg-unsplash.jpg',0,'attachment','image/jpeg',0);
INSERT INTO `wp_posts` VALUES (9451,2,'2021-07-20 22:41:56','2021-07-20 22:41:56','<!-- wp:media-text {\"mediaPosition\":\"right\",\"mediaId\":9447,\"mediaLink\":\"https://ns2020-investech.investech.com/?attachment_id=9447\",\"mediaType\":\"image\",\"mediaWidth\":38} -->\n<div class=\"wp-block-media-text alignwide has-media-on-the-right is-stacked-on-mobile\" style=\"grid-template-columns:auto 38%\"><figure class=\"wp-block-media-text__media\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/rollercoaster-qac9Q3pWHWg-unsplash.jpg\" alt=\"\" class=\"wp-image-9447 size-full\"/></figure><div class=\"wp-block-media-text__content\"><!-- wp:heading -->\n<h2>Tempted by high-flying ETFs in this aging bull market? </h2>\n<!-- /wp:heading -->\n\n<!-- wp:heading -->\n<h2>Just remember… Excitement is highest as the roller coaster goes over the top!</h2>\n<!-- /wp:heading --></div></div>\n<!-- /wp:media-text -->\n\n<!-- wp:paragraph -->\n<p>In today’s technologically advanced world, featuring self-driving cars, pilotless airplanes, and smart homes, a “hands-off” trend is also gaining popularity among the investing public. As indicated by the headlines below, passive index investing has become all the rage, and Exchange Traded Funds (ETFs) are the tool of choice:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column {\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:66.66%\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>ETFs could see $1 trillion in inflows over the coming year</strong></p><cite>MarketWatch, 1/31/17</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:33.33%\"></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column {\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:33.33%\"></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:66.66%\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Small investors’ move to ‘passive’ stock funds becomes a stampede</strong> </p><cite>LA Times, 4/9/17</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column {\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:66.66%\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Global ETF assets reach $4tn</strong> </p><p><em>The global exchange traded fund industry smashed past $4tn in assets last month…</em> </p><cite>Financial Times, 5/10/17</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:33.33%\"></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns {\"verticalAlignment\":\"center\"} -->\n<div class=\"wp-block-columns are-vertically-aligned-center\"><!-- wp:column {\"verticalAlignment\":\"center\",\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column is-vertically-aligned-center\" style=\"flex-basis:33.33%\"><!-- wp:paragraph {\"placeholder\":\"Content…\"} -->\n<p>And our personal favorite...</p>\n<!-- /wp:paragraph --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"verticalAlignment\":\"center\",\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column is-vertically-aligned-center\" style=\"flex-basis:66.66%\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Wheee! A Quadruple-Leveraged S&amp;P 500 ETF is Here</strong></p><cite>Barron\'s, 5/3/17</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column -->\n<div class=\"wp-block-column\"><!-- wp:heading {\"level\":3} -->\n<h3>Exchange Traded Fund (ETF)</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The first Exchange Traded Fund (ETF) was launched in 1993, and although they were slow to start, ETFs have proliferated over the last decade, both in number (see graph at right) and the variety of index funds available. There’s now an ETF for nearly every strategy, no matter how esoteric, and that has helped fuel the passive investing craze.</p>\n<!-- /wp:paragraph --></div>\n<!-- /wp:column -->\n\n<!-- wp:column -->\n<div class=\"wp-block-column\"><!-- wp:image {\"align\":\"center\",\"id\":4829,\"sizeSlug\":\"full\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-full\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2020/12/number-of-etfs.png\" alt=\"Graph showing the number of ETFs (registered in the U.S.), Source: Investment Company Institute\" class=\"wp-image-4829\"/><figcaption>Number of ETFs (registered in the U.S.), Source: Investment Company Institute</figcaption></figure></div>\n<!-- /wp:image --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:paragraph -->\n<p>Over the past 24 years, one can see the shift in interest from actively managed mutual funds toward passive investing. As shown in the graph below, net cash flows into actively managed funds were still four times larger than passive funds from 1993 through 2000. From 2001 through 2008, a change becomes evident as net cash flows for active funds turned negative while passive funds continued to grow. The disparity between the active and passive net cash flows during the current bull market (2009-2016) is remarkable, and it shows why there’s been a parabolic increase in the number of ETFs!</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":4831,\"width\":713,\"height\":397} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2020/12/Active-vs-Passive-Stock-Funds-Inflows.png\" alt=\"Graph showing net cash flows into actively managed funds between 1993 and 2016.\" class=\"wp-image-4831\" width=\"713\" height=\"397\"/><figcaption>Active vs. Passive Domestic Stock Funds; Source: Investment Company Institute</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3><strong>So, why has passive investing become all the rage in recent years?</strong></h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Many investors have been burned –not once, but twice– by the Tech Bubble of the 1990s and the Housing Bubble in 2007. Also, they are frustrated with the challenges of managing investments… a task that in this uncertain bull market has frequently seemed counterproductive.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>The most popular index funds are touted as low-cost and broadly diversified, with a portfolio full of blue chip stocks. Moreover, ETFs offer “instant liquidity” with intraday trading compared to mutual funds that only settle at the end of each trading day. To the average investor, passive funds with minimal fees, implied safety, and lots of liquidity may appear to be the Holy Grail. As we’ll see, however, there is more to the story…</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:quote {\"align\":\"center\",\"className\":\"is-style-default\"} -->\n<blockquote class=\"wp-block-quote has-text-align-center is-style-default\"><p>Excitement is Highest as the Roller Coaster Goes Over the Top.</p><cite>– Anonymous</cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:media-text {\"mediaPosition\":\"right\",\"mediaId\":4839,\"mediaType\":\"image\",\"mediaWidth\":43,\"verticalAlignment\":\"center\"} -->\n<div class=\"wp-block-media-text alignwide has-media-on-the-right is-stacked-on-mobile is-vertically-aligned-center\" style=\"grid-template-columns:auto 43%\"><figure class=\"wp-block-media-text__media\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2020/12/Total-Assets-Domestic-Equity-Index-Funds.png\" alt=\"Graph showing the total assets in Domestic Equity Index Funds, 1990\'s to 2016\" class=\"wp-image-4839 size-full\"/></figure><div class=\"wp-block-media-text__content\"><!-- wp:paragraph -->\n<p>Just as the number of ETFs has grown, the past few years have witnessed an explosion in assets tied to passive investing that has extended to both mutual funds and ETFs (as shown in graph at right). A large part of the growth has been in ETFs, which are poised to overtake index mutual funds as the preferred indexing vehicle. Both types of products have doubled in assets just since 2012.</p>\n<!-- /wp:paragraph --></div></div>\n<!-- /wp:media-text -->\n\n<!-- wp:paragraph -->\n<p>It is important to recognize that passive investing is not a fresh new idea; in fact, the concept was introduced by John Bogle (the founder of Vanguard) in the 1970s. This strategy has shifted in and out of favor, becoming more popular as bull markets age and losing its luster only after the damage has been done by the next bear market. Just like riding a roller coaster, the peak in public enthusiasm often comes as the bull market is cresting the top.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>A Trip Back in Time…</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The rise in the popularity of index funds has been seen before.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:quote {\"align\":\"center\"} -->\n<blockquote class=\"wp-block-quote has-text-align-center\"><p>It’s like deja vu all over again.</p><cite>- Yogi Berra</cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>The late 1990s: </h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>As the decade of the 1990s became the longest bull market in Wall Street history, the Tech Bubble wasn’t the only phenomenon catching investors’ attention. In 1998-99, headlines were touting the benefit of index investing as inflows reached record levels:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column -->\n<div class=\"wp-block-column\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><em>Saving for Retirement</em> <strong>Index Fever</strong></p><cite> Fortune, 11/9/98</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column -->\n\n<!-- wp:column -->\n<div class=\"wp-block-column\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Who Needs a Money Manager?</strong></p><cite>Business Week 2/22/99</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns {\"verticalAlignment\":\"center\"} -->\n<div class=\"wp-block-columns are-vertically-aligned-center\"><!-- wp:column {\"verticalAlignment\":\"center\",\"width\":\"\"} -->\n<div class=\"wp-block-column is-vertically-aligned-center\"><!-- wp:paragraph -->\n<p>In March 1999, InvesTech Research published the issue shown at right, <a href=\"https://ns2020-investech.investech.com/subscriber-library/lemming-principle/\">comparing the emotional influx of index investors to lemmings</a>. However, instead of falling off a cliff, index investors fell into the largest bear market since the 1930s (the S&amp;P 500 Index lost -49.1%).</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>2006-07:</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p><strong>Fast-forward to 2006-07:</strong> Index investing was even <em>more</em> popular at the peak of the last bull market (also one of the longer bull markets of the past 80 years):</p>\n<!-- /wp:paragraph --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"verticalAlignment\":\"center\",\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column is-vertically-aligned-center\" style=\"flex-basis:33.33%\"><!-- wp:image {\"align\":\"center\",\"id\":4840,\"width\":195,\"height\":201,\"sizeSlug\":\"medium\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-medium is-resized\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2020/12/V99I04-216x300.png\" alt=\"InvesTech Research newsletter, &quot;The Lemming Principle,&quot; March 12, 1999\" class=\"wp-image-4840\" width=\"195\" height=\"201\"/><figcaption>InvesTech Research newsletter, \"The Lemming Principle,\" March 12, 1999</figcaption></figure></div>\n<!-- /wp:image --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column {\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:66.66%\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Index Funds: So Hot Right Now</strong></p><cite>The Motley Fool, 12/11/06</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:33.33%\"></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column {\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:33.33%\"></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:66.66%\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Index funds help you avoid risks of stock selection, market timing</strong></p><cite>Boston Globe, 2/27/07</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column {\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:66.66%\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Owning the S&amp;P 500 is cheap, easy and smart</strong></p><cite>USA Today, 7/20/07</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:33.33%\"></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:block {\"ref\":5343} /-->\n\n<!-- wp:paragraph -->\n<p>In these previous periods, much like today, most investors perceived index funds – particularly the S&amp;P 500 Index funds – to be more diversified, safer investments.  We’ll discuss why index funds may not be all they’re thought to be…</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>The Dark Side of Passive Investing – Live by the Index, Die by the Index</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>As noted, history shows that index investing reaches the highest level of popularity in aging bull markets or near market peaks. The reason for this is that any type of “risk management” during a bull market tends to reduce or moderate a fund manager’s return. Consequently, it is not uncommon for a fully invested S&amp;P 500 Index fund to outperform most actively managed mutual funds and money managers when measured <em><strong>solely </strong></em>over the duration of a bull market.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>There are multiple reasons index or passive investing becomes more popular in an aging bull market. First, it is more comfortable. One doesn’t have the burden of making decisions about which stocks to invest in, or when to sell a stock if it rises or falls precipitously. Indexing also tends to remove the regret from bad decisions, because any loss can be attributed entirely to the market. Lastly, investing in an index fund is the cheapest and easiest way to take advantage of the market’s stellar gains which <em><strong>seem </strong></em>likely to continue. Yet before jumping into the indexing mania today, consider these inherent risks in passive investing…</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li><strong>By definition, index funds also guarantee that you will suffer 100% of the next bear market’s decline.</strong> Regardless of which index you are matching, the index fund is required to stay fully invested regardless of market risk or volatility.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li><strong>Assets flowing into the most popular index funds are funneling investments into the largest and most overvalued stocks in the market, driving them higher. </strong>The S&amp;P 500 is a capitalization weighted index, so money invested into these popular index funds is not evenly distributed in all 500 stocks. Rather, the largest companies by market cap receive a disproportionate amount of the investment. As a result, investors must take the good with the bad and favor the largest companies within the basket of 500 stocks, regardless of valuation and financial strength (or lack thereof).</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li><strong>Market volatility increases when interest narrows to the index heavyweights. </strong>Only 50 stocks account for nearly 50% of S&amp;P 500 capitalization and one-half of an index fund’s portfolio. Additionally, the top 10 largest stocks comprise over 20% of the Index. As a result, downside risk in the next bear market could increase if selling pressure hits the largest stocks at the same time. The increased focus on index investing of late may very well increase both the size of, and speed at which the next bear market decline occurs.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:image {\"align\":\"right\",\"id\":8324,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"alignright size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/06/iShares-Core-SP-500-ETF.jpg\" alt=\"\" class=\"wp-image-8324\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li><strong>Intraday liquidity for ETFs can experience dramatic structural challenges in times of market distress. </strong>For example, during the market dislocation on August 24, 2015 the liquidity of most ETFs all but dried up just as the market opened. A confluence of problems –including circuit breakers, an obscure NYSE rule allowing market makers to delay posting prices, and a lack of futures data for large hedgers– all combined to take the bid out of the ETF space. Even large, well-established ETFs like the $116 billion iShares Core S&amp;P 500 ETF (IVV) saw unprecedented declines. As shown on the graph at right, IVV fell -26% on the open, far more than the -5.3% drop of the underlying S&amp;P 500. As a result of this liquidity hiccup, or “flash crash” as it was called at the time, investors with outstanding market orders and stop-loss orders sold their shares in IVV for far less than their worth.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Bottom Line</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The broad diversification and implied liquidity offered by index ETFs gives many investors a false sense of security. When passively investing in an index, devoid of risk management, investors are still subject to varying degrees of valuation and liquidity risk, and they bear the full brunt of cyclical market risk.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>Risk Management is Vital to any Strategy – <em>Ignore at your own peril!</em></h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Many actively managed mutual funds and money managers take some steps to mitigate portfolio risk – at times to the detriment of bull market performance. Although passive indexing may appear to be easier and is also perceived to reduce risk, it ends up having the opposite effect during major downturns as it guarantees an investor will experience <strong><em>all </em></strong>of the losses in the corresponding market index. Remember, long-term performance is dependent not only on how much you make in the bull markets, but also how much you give back in the bear markets. Investments that are weighted toward the largest, most overvalued stocks and sectors are exactly the opposite of what might be used in a strategy that manages risk.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Index investing proponents generally downplay stock market cycles, but bear market survivability is a very real issue for many investors, particularly those in or nearing retirement. The decision to hold the course on an investment strategy usually depends on the severity of bear market losses and how long one’s portfolio remains underwater… in other words, how much time it takes to recover those losses.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>To effectively demonstrate this concept, the <strong>Ulcer Index </strong>was developed in 1987 by Peter Martin to measure the depth and duration of drawdowns from earlier highs in one’s portfolio. It provides a graphic illustration of the level of stress and ulcers (hence the name) that can emerge from suffering deep, prolonged losses in one’s retirement savings.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Shown below are the comparative Ulcer Index graphs of the InvesTech Model Portfolio versus the Vanguard Total Stock Market Index (VTSMX), which is the largest and most popular fund on the market today.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":8329,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/06/IT-Portfolio-vs-Vanguard-Ulcer-Index.jpg\" alt=\"\" class=\"wp-image-8329\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>The starts of the last two bear markets are noted in March 2000 and October 2007, as well as their subsequent market bottoms in October 2002 and March 2009. The green dashed lines illustrate the number of months required after the market bottom for one’s portfolio to recover the losses. Above all, the red shaded areas designate how long, and how deep one’s portfolio was underwater. These are the so-called “ulcer” zones when an investor must wait and wonder how long it will be before his portfolio is whole again.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>As you’ll note, InvesTech’s “risk management” strategy dramatically reduced the stress of the last two generational bear markets by limiting the time spent in the “ulcer” zones. While the InvesTech Model Portfolio didn’t outperform the Vanguard Total Stock Market Index Fund in the bull markets, our ability to manage and reduce risk provided a long-term return which more than doubled that of the Vanguard index fund. More importantly, InvesTech subscribers lost significantly less and recovered much more quickly during bear markets, avoiding the urge to panic out of the market at the wrong time.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>It is this combination of achieving safe returns and managing downside risk that matters most in the long-term performance of one’s portfolio… and in the survivability of bear markets.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:uagb/inline-notice {\"block_id\":\"d8f90386\",\"noticeContent\":\"\\u003cp\\u003ePast performance may not be indicative of future results. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended by InvesTech Research) will be profitable, equal any historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  \\u003ca href=\\u0022https://ns2020-investech.investech.com/terms-of-use/\\u0022 target=\\u0022_blank\\u0022 rel=\\u0022noreferrer noopener\\u0022\\u003eRead full Disclosures here\\u003c/a\\u003e\\u003ca href=\\u0022http://Past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk.  Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended by InvesTech Research) will be profitable, equal any historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.\\u0022 target=\\u0022_blank\\u0022 rel=\\u0022noreferrer noopener\\u0022\\u003e.\\u003c/a\\u003e\\u003c/p\\u003e\"} -->\n<div class=\"wp-block-uagb-inline-notice uagb-inline_notice__outer-wrap uagb-inline_notice__align-left uagb-block-d8f90386\"><h4 class=\"uagb-notice-title\">Important Disclosure Information</h4><div class=\"uagb-notice-text\"><p>Past performance may not be indicative of future results. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended by InvesTech Research) will be profitable, equal any historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  <a href=\"https://ns2020-investech.investech.com/terms-of-use/\" target=\"_blank\" rel=\"noreferrer noopener\">Read full Disclosures here</a><a href=\"http://Past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk.  Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended by InvesTech Research) will be profitable, equal any historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.\" target=\"_blank\" rel=\"noreferrer noopener\">.</a></p></div></div>\n<!-- /wp:uagb/inline-notice -->\n\n<!-- wp:spacer {\"height\":33} -->\n<div style=\"height:33px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:spacer {\"height\":33} -->\n<div style=\"height:33px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:spacer {\"height\":33} -->\n<div style=\"height:33px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:heading {\"level\":4} -->\n<h4>Excerpt from <em>InvesTech Research</em> - June 16, 2017</h4>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Also available to read in <a href=\"https://ns2020-investech.investech.com/wp-content/uploads/2020/08/IndexingFever.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF format</a></p>\n<!-- /wp:paragraph -->','Passive Investing: Inevitable Black Eye','Tempted by high-flying ETFs in this aging bull market? Just remember… Excitement is highest as the roller coaster goes over the top! In today’s technologically advanced world, featuring self-driving cars, pilotless airplanes, and smart homes, a “hands-off” trend is also gaining popularity among the investing public.','inherit','closed','closed','','2468-revision-v1','','','2021-07-20 22:41:56','2021-07-20 22:41:56','',2468,'https://ns2020-investech.investech.com/?p=9451',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9452,2,'2021-07-20 22:41:58','2021-07-20 22:41:58','<!-- wp:media-text {\"mediaPosition\":\"right\",\"mediaId\":9447,\"mediaLink\":\"https://ns2020-investech.investech.com/?attachment_id=9447\",\"mediaType\":\"image\",\"mediaWidth\":38} -->\n<div class=\"wp-block-media-text alignwide has-media-on-the-right is-stacked-on-mobile\" style=\"grid-template-columns:auto 38%\"><figure class=\"wp-block-media-text__media\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/rollercoaster-qac9Q3pWHWg-unsplash.jpg\" alt=\"\" class=\"wp-image-9447 size-full\"/></figure><div class=\"wp-block-media-text__content\"><!-- wp:heading -->\n<h2>Tempted by high-flying ETFs in this aging bull market? </h2>\n<!-- /wp:heading -->\n\n<!-- wp:heading -->\n<h2>Just remember… Excitement is highest as the roller coaster goes over the top!</h2>\n<!-- /wp:heading --></div></div>\n<!-- /wp:media-text -->\n\n<!-- wp:paragraph -->\n<p>In today’s technologically advanced world, featuring self-driving cars, pilotless airplanes, and smart homes, a “hands-off” trend is also gaining popularity among the investing public. As indicated by the headlines below, passive index investing has become all the rage, and Exchange Traded Funds (ETFs) are the tool of choice:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column {\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:66.66%\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>ETFs could see $1 trillion in inflows over the coming year</strong></p><cite>MarketWatch, 1/31/17</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:33.33%\"></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column {\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:33.33%\"></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:66.66%\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Small investors’ move to ‘passive’ stock funds becomes a stampede</strong> </p><cite>LA Times, 4/9/17</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column {\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:66.66%\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Global ETF assets reach $4tn</strong> </p><p><em>The global exchange traded fund industry smashed past $4tn in assets last month…</em> </p><cite>Financial Times, 5/10/17</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:33.33%\"></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns {\"verticalAlignment\":\"center\"} -->\n<div class=\"wp-block-columns are-vertically-aligned-center\"><!-- wp:column {\"verticalAlignment\":\"center\",\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column is-vertically-aligned-center\" style=\"flex-basis:33.33%\"><!-- wp:paragraph {\"placeholder\":\"Content…\"} -->\n<p>And our personal favorite...</p>\n<!-- /wp:paragraph --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"verticalAlignment\":\"center\",\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column is-vertically-aligned-center\" style=\"flex-basis:66.66%\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Wheee! A Quadruple-Leveraged S&amp;P 500 ETF is Here</strong></p><cite>Barron\'s, 5/3/17</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column -->\n<div class=\"wp-block-column\"><!-- wp:heading {\"level\":3} -->\n<h3>Exchange Traded Fund (ETF)</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The first Exchange Traded Fund (ETF) was launched in 1993, and although they were slow to start, ETFs have proliferated over the last decade, both in number (see graph at right) and the variety of index funds available. There’s now an ETF for nearly every strategy, no matter how esoteric, and that has helped fuel the passive investing craze.</p>\n<!-- /wp:paragraph --></div>\n<!-- /wp:column -->\n\n<!-- wp:column -->\n<div class=\"wp-block-column\"><!-- wp:image {\"align\":\"center\",\"id\":4829,\"sizeSlug\":\"full\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-full\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2020/12/number-of-etfs.png\" alt=\"Graph showing the number of ETFs (registered in the U.S.), Source: Investment Company Institute\" class=\"wp-image-4829\"/><figcaption>Number of ETFs (registered in the U.S.), Source: Investment Company Institute</figcaption></figure></div>\n<!-- /wp:image --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:paragraph -->\n<p>Over the past 24 years, one can see the shift in interest from actively managed mutual funds toward passive investing. As shown in the graph below, net cash flows into actively managed funds were still four times larger than passive funds from 1993 through 2000. From 2001 through 2008, a change becomes evident as net cash flows for active funds turned negative while passive funds continued to grow. The disparity between the active and passive net cash flows during the current bull market (2009-2016) is remarkable, and it shows why there’s been a parabolic increase in the number of ETFs!</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":4831,\"width\":713,\"height\":397} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2020/12/Active-vs-Passive-Stock-Funds-Inflows.png\" alt=\"Graph showing net cash flows into actively managed funds between 1993 and 2016.\" class=\"wp-image-4831\" width=\"713\" height=\"397\"/><figcaption>Active vs. Passive Domestic Stock Funds; Source: Investment Company Institute</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3><strong>So, why has passive investing become all the rage in recent years?</strong></h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Many investors have been burned –not once, but twice– by the Tech Bubble of the 1990s and the Housing Bubble in 2007. Also, they are frustrated with the challenges of managing investments… a task that in this uncertain bull market has frequently seemed counterproductive.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>The most popular index funds are touted as low-cost and broadly diversified, with a portfolio full of blue chip stocks. Moreover, ETFs offer “instant liquidity” with intraday trading compared to mutual funds that only settle at the end of each trading day. To the average investor, passive funds with minimal fees, implied safety, and lots of liquidity may appear to be the Holy Grail. As we’ll see, however, there is more to the story…</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:quote {\"align\":\"center\",\"className\":\"is-style-default\"} -->\n<blockquote class=\"wp-block-quote has-text-align-center is-style-default\"><p>Excitement is Highest as the Roller Coaster Goes Over the Top.</p><cite>– Anonymous</cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:media-text {\"mediaPosition\":\"right\",\"mediaId\":4839,\"mediaType\":\"image\",\"mediaWidth\":43,\"verticalAlignment\":\"center\"} -->\n<div class=\"wp-block-media-text alignwide has-media-on-the-right is-stacked-on-mobile is-vertically-aligned-center\" style=\"grid-template-columns:auto 43%\"><figure class=\"wp-block-media-text__media\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2020/12/Total-Assets-Domestic-Equity-Index-Funds.png\" alt=\"Graph showing the total assets in Domestic Equity Index Funds, 1990\'s to 2016\" class=\"wp-image-4839 size-full\"/></figure><div class=\"wp-block-media-text__content\"><!-- wp:paragraph -->\n<p>Just as the number of ETFs has grown, the past few years have witnessed an explosion in assets tied to passive investing that has extended to both mutual funds and ETFs (as shown in graph at right). A large part of the growth has been in ETFs, which are poised to overtake index mutual funds as the preferred indexing vehicle. Both types of products have doubled in assets just since 2012.</p>\n<!-- /wp:paragraph --></div></div>\n<!-- /wp:media-text -->\n\n<!-- wp:paragraph -->\n<p>It is important to recognize that passive investing is not a fresh new idea; in fact, the concept was introduced by John Bogle (the founder of Vanguard) in the 1970s. This strategy has shifted in and out of favor, becoming more popular as bull markets age and losing its luster only after the damage has been done by the next bear market. Just like riding a roller coaster, the peak in public enthusiasm often comes as the bull market is cresting the top.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>A Trip Back in Time…</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The rise in the popularity of index funds has been seen before.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:quote {\"align\":\"center\"} -->\n<blockquote class=\"wp-block-quote has-text-align-center\"><p>It’s like deja vu all over again.</p><cite>- Yogi Berra</cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>The late 1990s: </h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>As the decade of the 1990s became the longest bull market in Wall Street history, the Tech Bubble wasn’t the only phenomenon catching investors’ attention. In 1998-99, headlines were touting the benefit of index investing as inflows reached record levels:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column -->\n<div class=\"wp-block-column\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><em>Saving for Retirement</em> <strong>Index Fever</strong></p><cite> Fortune, 11/9/98</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column -->\n\n<!-- wp:column -->\n<div class=\"wp-block-column\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Who Needs a Money Manager?</strong></p><cite>Business Week 2/22/99</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns {\"verticalAlignment\":\"center\"} -->\n<div class=\"wp-block-columns are-vertically-aligned-center\"><!-- wp:column {\"verticalAlignment\":\"center\",\"width\":\"\"} -->\n<div class=\"wp-block-column is-vertically-aligned-center\"><!-- wp:paragraph -->\n<p>In March 1999, InvesTech Research published the issue shown at right, <a href=\"https://ns2020-investech.investech.com/subscriber-library/lemming-principle/\">comparing the emotional influx of index investors to lemmings</a>. However, instead of falling off a cliff, index investors fell into the largest bear market since the 1930s (the S&amp;P 500 Index lost -49.1%).</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>2006-07:</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p><strong>Fast-forward to 2006-07:</strong> Index investing was even <em>more</em> popular at the peak of the last bull market (also one of the longer bull markets of the past 80 years):</p>\n<!-- /wp:paragraph --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"verticalAlignment\":\"center\",\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column is-vertically-aligned-center\" style=\"flex-basis:33.33%\"><!-- wp:image {\"align\":\"center\",\"id\":4840,\"width\":195,\"height\":201,\"sizeSlug\":\"medium\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-medium is-resized\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2020/12/V99I04-216x300.png\" alt=\"InvesTech Research newsletter, &quot;The Lemming Principle,&quot; March 12, 1999\" class=\"wp-image-4840\" width=\"195\" height=\"201\"/><figcaption>InvesTech Research newsletter, \"The Lemming Principle,\" March 12, 1999</figcaption></figure></div>\n<!-- /wp:image --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column {\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:66.66%\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Index Funds: So Hot Right Now</strong></p><cite>The Motley Fool, 12/11/06</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:33.33%\"></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column {\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:33.33%\"></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:66.66%\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Index funds help you avoid risks of stock selection, market timing</strong></p><cite>Boston Globe, 2/27/07</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column {\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:66.66%\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Owning the S&amp;P 500 is cheap, easy and smart</strong></p><cite>USA Today, 7/20/07</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:33.33%\"></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:block {\"ref\":5343} /-->\n\n<!-- wp:paragraph -->\n<p>In these previous periods, much like today, most investors perceived index funds – particularly the S&amp;P 500 Index funds – to be more diversified, safer investments.  We’ll discuss why index funds may not be all they’re thought to be…</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>The Dark Side of Passive Investing – Live by the Index, Die by the Index</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>As noted, history shows that index investing reaches the highest level of popularity in aging bull markets or near market peaks. The reason for this is that any type of “risk management” during a bull market tends to reduce or moderate a fund manager’s return. Consequently, it is not uncommon for a fully invested S&amp;P 500 Index fund to outperform most actively managed mutual funds and money managers when measured <em><strong>solely </strong></em>over the duration of a bull market.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>There are multiple reasons index or passive investing becomes more popular in an aging bull market. First, it is more comfortable. One doesn’t have the burden of making decisions about which stocks to invest in, or when to sell a stock if it rises or falls precipitously. Indexing also tends to remove the regret from bad decisions, because any loss can be attributed entirely to the market. Lastly, investing in an index fund is the cheapest and easiest way to take advantage of the market’s stellar gains which <em><strong>seem </strong></em>likely to continue. Yet before jumping into the indexing mania today, consider these inherent risks in passive investing…</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li><strong>By definition, index funds also guarantee that you will suffer 100% of the next bear market’s decline.</strong> Regardless of which index you are matching, the index fund is required to stay fully invested regardless of market risk or volatility.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li><strong>Assets flowing into the most popular index funds are funneling investments into the largest and most overvalued stocks in the market, driving them higher. </strong>The S&amp;P 500 is a capitalization weighted index, so money invested into these popular index funds is not evenly distributed in all 500 stocks. Rather, the largest companies by market cap receive a disproportionate amount of the investment. As a result, investors must take the good with the bad and favor the largest companies within the basket of 500 stocks, regardless of valuation and financial strength (or lack thereof).</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li><strong>Market volatility increases when interest narrows to the index heavyweights. </strong>Only 50 stocks account for nearly 50% of S&amp;P 500 capitalization and one-half of an index fund’s portfolio. Additionally, the top 10 largest stocks comprise over 20% of the Index. As a result, downside risk in the next bear market could increase if selling pressure hits the largest stocks at the same time. The increased focus on index investing of late may very well increase both the size of, and speed at which the next bear market decline occurs.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:image {\"align\":\"right\",\"id\":8324,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"alignright size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/06/iShares-Core-SP-500-ETF.jpg\" alt=\"\" class=\"wp-image-8324\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li><strong>Intraday liquidity for ETFs can experience dramatic structural challenges in times of market distress. </strong>For example, during the market dislocation on August 24, 2015 the liquidity of most ETFs all but dried up just as the market opened. A confluence of problems –including circuit breakers, an obscure NYSE rule allowing market makers to delay posting prices, and a lack of futures data for large hedgers– all combined to take the bid out of the ETF space. Even large, well-established ETFs like the $116 billion iShares Core S&amp;P 500 ETF (IVV) saw unprecedented declines. As shown on the graph at right, IVV fell -26% on the open, far more than the -5.3% drop of the underlying S&amp;P 500. As a result of this liquidity hiccup, or “flash crash” as it was called at the time, investors with outstanding market orders and stop-loss orders sold their shares in IVV for far less than their worth.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Bottom Line</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The broad diversification and implied liquidity offered by index ETFs gives many investors a false sense of security. When passively investing in an index, devoid of risk management, investors are still subject to varying degrees of valuation and liquidity risk, and they bear the full brunt of cyclical market risk.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>Risk Management is Vital to any Strategy – <em>Ignore at your own peril!</em></h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Many actively managed mutual funds and money managers take some steps to mitigate portfolio risk – at times to the detriment of bull market performance. Although passive indexing may appear to be easier and is also perceived to reduce risk, it ends up having the opposite effect during major downturns as it guarantees an investor will experience <strong><em>all </em></strong>of the losses in the corresponding market index. Remember, long-term performance is dependent not only on how much you make in the bull markets, but also how much you give back in the bear markets. Investments that are weighted toward the largest, most overvalued stocks and sectors are exactly the opposite of what might be used in a strategy that manages risk.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Index investing proponents generally downplay stock market cycles, but bear market survivability is a very real issue for many investors, particularly those in or nearing retirement. The decision to hold the course on an investment strategy usually depends on the severity of bear market losses and how long one’s portfolio remains underwater… in other words, how much time it takes to recover those losses.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>To effectively demonstrate this concept, the <strong>Ulcer Index </strong>was developed in 1987 by Peter Martin to measure the depth and duration of drawdowns from earlier highs in one’s portfolio. It provides a graphic illustration of the level of stress and ulcers (hence the name) that can emerge from suffering deep, prolonged losses in one’s retirement savings.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Shown below are the comparative Ulcer Index graphs of the InvesTech Model Portfolio versus the Vanguard Total Stock Market Index (VTSMX), which is the largest and most popular fund on the market today.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":8329,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/06/IT-Portfolio-vs-Vanguard-Ulcer-Index.jpg\" alt=\"\" class=\"wp-image-8329\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>The starts of the last two bear markets are noted in March 2000 and October 2007, as well as their subsequent market bottoms in October 2002 and March 2009. The green dashed lines illustrate the number of months required after the market bottom for one’s portfolio to recover the losses. Above all, the red shaded areas designate how long, and how deep one’s portfolio was underwater. These are the so-called “ulcer” zones when an investor must wait and wonder how long it will be before his portfolio is whole again.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>As you’ll note, InvesTech’s “risk management” strategy dramatically reduced the stress of the last two generational bear markets by limiting the time spent in the “ulcer” zones. While the InvesTech Model Portfolio didn’t outperform the Vanguard Total Stock Market Index Fund in the bull markets, our ability to manage and reduce risk provided a long-term return which more than doubled that of the Vanguard index fund. More importantly, InvesTech subscribers lost significantly less and recovered much more quickly during bear markets, avoiding the urge to panic out of the market at the wrong time.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>It is this combination of achieving safe returns and managing downside risk that matters most in the long-term performance of one’s portfolio… and in the survivability of bear markets.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:uagb/inline-notice {\"block_id\":\"d8f90386\",\"noticeContent\":\"\\u003cp\\u003ePast performance may not be indicative of future results. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended by InvesTech Research) will be profitable, equal any historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  \\u003ca href=\\u0022https://ns2020-investech.investech.com/terms-of-use/\\u0022 target=\\u0022_blank\\u0022 rel=\\u0022noreferrer noopener\\u0022\\u003eRead full Disclosures here\\u003c/a\\u003e\\u003ca href=\\u0022http://Past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk.  Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended by InvesTech Research) will be profitable, equal any historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.\\u0022 target=\\u0022_blank\\u0022 rel=\\u0022noreferrer noopener\\u0022\\u003e.\\u003c/a\\u003e\\u003c/p\\u003e\"} -->\n<div class=\"wp-block-uagb-inline-notice uagb-inline_notice__outer-wrap uagb-inline_notice__align-left uagb-block-d8f90386\"><h4 class=\"uagb-notice-title\">Important Disclosure Information</h4><div class=\"uagb-notice-text\"><p>Past performance may not be indicative of future results. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended by InvesTech Research) will be profitable, equal any historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  <a href=\"https://ns2020-investech.investech.com/terms-of-use/\" target=\"_blank\" rel=\"noreferrer noopener\">Read full Disclosures here</a><a href=\"http://Past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk.  Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended by InvesTech Research) will be profitable, equal any historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.\" target=\"_blank\" rel=\"noreferrer noopener\">.</a></p></div></div>\n<!-- /wp:uagb/inline-notice -->\n\n<!-- wp:spacer {\"height\":33} -->\n<div style=\"height:33px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:spacer {\"height\":33} -->\n<div style=\"height:33px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:spacer {\"height\":33} -->\n<div style=\"height:33px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:heading {\"level\":4} -->\n<h4>Excerpt from <em>InvesTech Research</em> - June 16, 2017</h4>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Also available to read in <a href=\"https://ns2020-investech.investech.com/wp-content/uploads/2020/08/IndexingFever.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF format</a></p>\n<!-- /wp:paragraph -->','Passive Investing: Inevitable Black Eye','Tempted by high-flying ETFs in this aging bull market? Just remember… Excitement is highest as the roller coaster goes over the top! In today’s technologically advanced world, featuring self-driving cars, pilotless airplanes, and smart homes, a “hands-off” trend is also gaining popularity among the investing public.','inherit','closed','closed','','2468-revision-v1','','','2021-07-20 22:41:58','2021-07-20 22:41:58','',2468,'https://ns2020-investech.investech.com/?p=9452',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9453,2,'2021-07-20 22:42:27','2021-07-20 22:42:27','<!-- wp:media-text {\"mediaPosition\":\"right\",\"mediaId\":9447,\"mediaLink\":\"https://ns2020-investech.investech.com/?attachment_id=9447\",\"mediaType\":\"image\",\"mediaWidth\":38} -->\n<div class=\"wp-block-media-text alignwide has-media-on-the-right is-stacked-on-mobile\" style=\"grid-template-columns:auto 38%\"><figure class=\"wp-block-media-text__media\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/rollercoaster-qac9Q3pWHWg-unsplash.jpg\" alt=\"\" class=\"wp-image-9447 size-full\"/></figure><div class=\"wp-block-media-text__content\"><!-- wp:heading -->\n<h2>Tempted by high-flying ETFs in this aging bull market? </h2>\n<!-- /wp:heading -->\n\n<!-- wp:heading -->\n<h2>Just remember… Excitement is highest as the roller coaster goes over the top!</h2>\n<!-- /wp:heading --></div></div>\n<!-- /wp:media-text -->\n\n<!-- wp:paragraph -->\n<p>In today’s technologically advanced world, featuring self-driving cars, pilotless airplanes, and smart homes, a “hands-off” trend is also gaining popularity among the investing public. As indicated by the headlines below, passive index investing has become all the rage, and Exchange Traded Funds (ETFs) are the tool of choice:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column {\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:66.66%\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>ETFs could see $1 trillion in inflows over the coming year</strong></p><cite>MarketWatch, 1/31/17</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:33.33%\"></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column {\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:33.33%\"></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:66.66%\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Small investors’ move to ‘passive’ stock funds becomes a stampede</strong> </p><cite>LA Times, 4/9/17</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column {\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:66.66%\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Global ETF assets reach $4tn</strong> </p><p><em>The global exchange traded fund industry smashed past $4tn in assets last month…</em> </p><cite>Financial Times, 5/10/17</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:33.33%\"></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns {\"verticalAlignment\":\"center\"} -->\n<div class=\"wp-block-columns are-vertically-aligned-center\"><!-- wp:column {\"verticalAlignment\":\"center\",\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column is-vertically-aligned-center\" style=\"flex-basis:33.33%\"><!-- wp:paragraph {\"placeholder\":\"Content…\"} -->\n<p>And our personal favorite...</p>\n<!-- /wp:paragraph --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"verticalAlignment\":\"center\",\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column is-vertically-aligned-center\" style=\"flex-basis:66.66%\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Wheee! A Quadruple-Leveraged S&amp;P 500 ETF is Here</strong></p><cite>Barron\'s, 5/3/17</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column -->\n<div class=\"wp-block-column\"><!-- wp:heading {\"level\":3} -->\n<h3>Exchange Traded Fund (ETF)</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The first Exchange Traded Fund (ETF) was launched in 1993, and although they were slow to start, ETFs have proliferated over the last decade, both in number (see graph at right) and the variety of index funds available. There’s now an ETF for nearly every strategy, no matter how esoteric, and that has helped fuel the passive investing craze.</p>\n<!-- /wp:paragraph --></div>\n<!-- /wp:column -->\n\n<!-- wp:column -->\n<div class=\"wp-block-column\"><!-- wp:image {\"align\":\"center\",\"id\":4829,\"sizeSlug\":\"full\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-full\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2020/12/number-of-etfs.png\" alt=\"Graph showing the number of ETFs (registered in the U.S.), Source: Investment Company Institute\" class=\"wp-image-4829\"/><figcaption>Number of ETFs (registered in the U.S.), Source: Investment Company Institute</figcaption></figure></div>\n<!-- /wp:image --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:paragraph -->\n<p>Over the past 24 years, one can see the shift in interest from actively managed mutual funds toward passive investing. As shown in the graph below, net cash flows into actively managed funds were still four times larger than passive funds from 1993 through 2000. From 2001 through 2008, a change becomes evident as net cash flows for active funds turned negative while passive funds continued to grow. The disparity between the active and passive net cash flows during the current bull market (2009-2016) is remarkable, and it shows why there’s been a parabolic increase in the number of ETFs!</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":4831,\"width\":713,\"height\":397} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2020/12/Active-vs-Passive-Stock-Funds-Inflows.png\" alt=\"Graph showing net cash flows into actively managed funds between 1993 and 2016.\" class=\"wp-image-4831\" width=\"713\" height=\"397\"/><figcaption>Active vs. Passive Domestic Stock Funds; Source: Investment Company Institute</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3><strong>So, why has passive investing become all the rage in recent years?</strong></h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Many investors have been burned –not once, but twice– by the Tech Bubble of the 1990s and the Housing Bubble in 2007. Also, they are frustrated with the challenges of managing investments… a task that in this uncertain bull market has frequently seemed counterproductive.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>The most popular index funds are touted as low-cost and broadly diversified, with a portfolio full of blue chip stocks. Moreover, ETFs offer “instant liquidity” with intraday trading compared to mutual funds that only settle at the end of each trading day. To the average investor, passive funds with minimal fees, implied safety, and lots of liquidity may appear to be the Holy Grail. As we’ll see, however, there is more to the story…</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:quote {\"align\":\"center\",\"className\":\"is-style-default\"} -->\n<blockquote class=\"wp-block-quote has-text-align-center is-style-default\"><p>Excitement is Highest as the Roller Coaster Goes Over the Top.</p><cite>– Anonymous</cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:media-text {\"mediaPosition\":\"right\",\"mediaId\":4839,\"mediaType\":\"image\",\"mediaWidth\":43,\"verticalAlignment\":\"center\"} -->\n<div class=\"wp-block-media-text alignwide has-media-on-the-right is-stacked-on-mobile is-vertically-aligned-center\" style=\"grid-template-columns:auto 43%\"><figure class=\"wp-block-media-text__media\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2020/12/Total-Assets-Domestic-Equity-Index-Funds.png\" alt=\"Graph showing the total assets in Domestic Equity Index Funds, 1990\'s to 2016\" class=\"wp-image-4839 size-full\"/></figure><div class=\"wp-block-media-text__content\"><!-- wp:paragraph -->\n<p>Just as the number of ETFs has grown, the past few years have witnessed an explosion in assets tied to passive investing that has extended to both mutual funds and ETFs (as shown in graph at right). A large part of the growth has been in ETFs, which are poised to overtake index mutual funds as the preferred indexing vehicle. Both types of products have doubled in assets just since 2012.</p>\n<!-- /wp:paragraph --></div></div>\n<!-- /wp:media-text -->\n\n<!-- wp:paragraph -->\n<p>It is important to recognize that passive investing is not a fresh new idea; in fact, the concept was introduced by John Bogle (the founder of Vanguard) in the 1970s. This strategy has shifted in and out of favor, becoming more popular as bull markets age and losing its luster only after the damage has been done by the next bear market. Just like riding a roller coaster, the peak in public enthusiasm often comes as the bull market is cresting the top.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>A Trip Back in Time…</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The rise in the popularity of index funds has been seen before.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:quote {\"align\":\"center\"} -->\n<blockquote class=\"wp-block-quote has-text-align-center\"><p>It’s like deja vu all over again.</p><cite>- Yogi Berra</cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>The late 1990s: </h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>As the decade of the 1990s became the longest bull market in Wall Street history, the Tech Bubble wasn’t the only phenomenon catching investors’ attention. In 1998-99, headlines were touting the benefit of index investing as inflows reached record levels:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column -->\n<div class=\"wp-block-column\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><em>Saving for Retirement</em> <strong>Index Fever</strong></p><cite> Fortune, 11/9/98</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column -->\n\n<!-- wp:column -->\n<div class=\"wp-block-column\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Who Needs a Money Manager?</strong></p><cite>Business Week 2/22/99</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns {\"verticalAlignment\":\"center\"} -->\n<div class=\"wp-block-columns are-vertically-aligned-center\"><!-- wp:column {\"verticalAlignment\":\"center\",\"width\":\"\"} -->\n<div class=\"wp-block-column is-vertically-aligned-center\"><!-- wp:paragraph -->\n<p>In March 1999, InvesTech Research published the issue shown at right, <a href=\"https://ns2020-investech.investech.com/subscriber-library/lemming-principle/\">comparing the emotional influx of index investors to lemmings</a>. However, instead of falling off a cliff, index investors fell into the largest bear market since the 1930s (the S&amp;P 500 Index lost -49.1%).</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>2006-07:</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p><strong>Fast-forward to 2006-07:</strong> Index investing was even <em>more</em> popular at the peak of the last bull market (also one of the longer bull markets of the past 80 years):</p>\n<!-- /wp:paragraph --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"verticalAlignment\":\"center\",\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column is-vertically-aligned-center\" style=\"flex-basis:33.33%\"><!-- wp:image {\"align\":\"center\",\"id\":4840,\"width\":195,\"height\":201,\"sizeSlug\":\"medium\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-medium is-resized\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2020/12/V99I04-216x300.png\" alt=\"InvesTech Research newsletter, &quot;The Lemming Principle,&quot; March 12, 1999\" class=\"wp-image-4840\" width=\"195\" height=\"201\"/><figcaption>InvesTech Research newsletter, \"The Lemming Principle,\" March 12, 1999</figcaption></figure></div>\n<!-- /wp:image --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column {\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:66.66%\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Index Funds: So Hot Right Now</strong></p><cite>The Motley Fool, 12/11/06</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:33.33%\"></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column {\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:33.33%\"></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:66.66%\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Index funds help you avoid risks of stock selection, market timing</strong></p><cite>Boston Globe, 2/27/07</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column {\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:66.66%\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Owning the S&amp;P 500 is cheap, easy and smart</strong></p><cite>USA Today, 7/20/07</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:33.33%\"></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:block {\"ref\":5343} /-->\n\n<!-- wp:paragraph -->\n<p>In these previous periods, much like today, most investors perceived index funds – particularly the S&amp;P 500 Index funds – to be more diversified, safer investments.  We’ll discuss why index funds may not be all they’re thought to be…</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>The Dark Side of Passive Investing – Live by the Index, Die by the Index</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>As noted, history shows that index investing reaches the highest level of popularity in aging bull markets or near market peaks. The reason for this is that any type of “risk management” during a bull market tends to reduce or moderate a fund manager’s return. Consequently, it is not uncommon for a fully invested S&amp;P 500 Index fund to outperform most actively managed mutual funds and money managers when measured <em><strong>solely </strong></em>over the duration of a bull market.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>There are multiple reasons index or passive investing becomes more popular in an aging bull market. First, it is more comfortable. One doesn’t have the burden of making decisions about which stocks to invest in, or when to sell a stock if it rises or falls precipitously. Indexing also tends to remove the regret from bad decisions, because any loss can be attributed entirely to the market. Lastly, investing in an index fund is the cheapest and easiest way to take advantage of the market’s stellar gains which <em><strong>seem </strong></em>likely to continue. Yet before jumping into the indexing mania today, consider these inherent risks in passive investing…</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li><strong>By definition, index funds also guarantee that you will suffer 100% of the next bear market’s decline.</strong> Regardless of which index you are matching, the index fund is required to stay fully invested regardless of market risk or volatility.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li><strong>Assets flowing into the most popular index funds are funneling investments into the largest and most overvalued stocks in the market, driving them higher. </strong>The S&amp;P 500 is a capitalization weighted index, so money invested into these popular index funds is not evenly distributed in all 500 stocks. Rather, the largest companies by market cap receive a disproportionate amount of the investment. As a result, investors must take the good with the bad and favor the largest companies within the basket of 500 stocks, regardless of valuation and financial strength (or lack thereof).</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li><strong>Market volatility increases when interest narrows to the index heavyweights. </strong>Only 50 stocks account for nearly 50% of S&amp;P 500 capitalization and one-half of an index fund’s portfolio. Additionally, the top 10 largest stocks comprise over 20% of the Index. As a result, downside risk in the next bear market could increase if selling pressure hits the largest stocks at the same time. The increased focus on index investing of late may very well increase both the size of, and speed at which the next bear market decline occurs.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:image {\"align\":\"right\",\"id\":8324,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"alignright size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/06/iShares-Core-SP-500-ETF.jpg\" alt=\"\" class=\"wp-image-8324\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li><strong>Intraday liquidity for ETFs can experience dramatic structural challenges in times of market distress. </strong>For example, during the market dislocation on August 24, 2015 the liquidity of most ETFs all but dried up just as the market opened. A confluence of problems –including circuit breakers, an obscure NYSE rule allowing market makers to delay posting prices, and a lack of futures data for large hedgers– all combined to take the bid out of the ETF space. Even large, well-established ETFs like the $116 billion iShares Core S&amp;P 500 ETF (IVV) saw unprecedented declines. As shown on the graph at right, IVV fell -26% on the open, far more than the -5.3% drop of the underlying S&amp;P 500. As a result of this liquidity hiccup, or “flash crash” as it was called at the time, investors with outstanding market orders and stop-loss orders sold their shares in IVV for far less than their worth.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Bottom Line</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The broad diversification and implied liquidity offered by index ETFs gives many investors a false sense of security. When passively investing in an index, devoid of risk management, investors are still subject to varying degrees of valuation and liquidity risk, and they bear the full brunt of cyclical market risk.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>Risk Management is Vital to any Strategy – <em>Ignore at your own peril!</em></h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Many actively managed mutual funds and money managers take some steps to mitigate portfolio risk – at times to the detriment of bull market performance. Although passive indexing may appear to be easier and is also perceived to reduce risk, it ends up having the opposite effect during major downturns as it guarantees an investor will experience <strong><em>all </em></strong>of the losses in the corresponding market index. Remember, long-term performance is dependent not only on how much you make in the bull markets, but also how much you give back in the bear markets. Investments that are weighted toward the largest, most overvalued stocks and sectors are exactly the opposite of what might be used in a strategy that manages risk.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Index investing proponents generally downplay stock market cycles, but bear market survivability is a very real issue for many investors, particularly those in or nearing retirement. The decision to hold the course on an investment strategy usually depends on the severity of bear market losses and how long one’s portfolio remains underwater… in other words, how much time it takes to recover those losses.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>To effectively demonstrate this concept, the <strong>Ulcer Index </strong>was developed in 1987 by Peter Martin to measure the depth and duration of drawdowns from earlier highs in one’s portfolio. It provides a graphic illustration of the level of stress and ulcers (hence the name) that can emerge from suffering deep, prolonged losses in one’s retirement savings.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Shown below are the comparative Ulcer Index graphs of the InvesTech Model Portfolio versus the Vanguard Total Stock Market Index (VTSMX), which is the largest and most popular fund on the market today.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":8329,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/06/IT-Portfolio-vs-Vanguard-Ulcer-Index.jpg\" alt=\"\" class=\"wp-image-8329\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>The starts of the last two bear markets are noted in March 2000 and October 2007, as well as their subsequent market bottoms in October 2002 and March 2009. The green dashed lines illustrate the number of months required after the market bottom for one’s portfolio to recover the losses. Above all, the red shaded areas designate how long, and how deep one’s portfolio was underwater. These are the so-called “ulcer” zones when an investor must wait and wonder how long it will be before his portfolio is whole again.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>As you’ll note, InvesTech’s “risk management” strategy dramatically reduced the stress of the last two generational bear markets by limiting the time spent in the “ulcer” zones. While the InvesTech Model Portfolio didn’t outperform the Vanguard Total Stock Market Index Fund in the bull markets, our ability to manage and reduce risk provided a long-term return which more than doubled that of the Vanguard index fund. More importantly, InvesTech subscribers lost significantly less and recovered much more quickly during bear markets, avoiding the urge to panic out of the market at the wrong time.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>It is this combination of achieving safe returns and managing downside risk that matters most in the long-term performance of one’s portfolio… and in the survivability of bear markets.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:uagb/inline-notice {\"block_id\":\"d8f90386\",\"noticeContent\":\"\\u003cp\\u003ePast performance may not be indicative of future results. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended by InvesTech Research) will be profitable, equal any historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  \\u003ca href=\\u0022https://ns2020-investech.investech.com/terms-of-use/\\u0022 target=\\u0022_blank\\u0022 rel=\\u0022noreferrer noopener\\u0022\\u003eRead full Disclosures here\\u003c/a\\u003e\\u003ca href=\\u0022http://Past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk.  Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended by InvesTech Research) will be profitable, equal any historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.\\u0022 target=\\u0022_blank\\u0022 rel=\\u0022noreferrer noopener\\u0022\\u003e.\\u003c/a\\u003e\\u003c/p\\u003e\"} -->\n<div class=\"wp-block-uagb-inline-notice uagb-inline_notice__outer-wrap uagb-inline_notice__align-left uagb-block-d8f90386\"><h4 class=\"uagb-notice-title\">Important Disclosure Information</h4><div class=\"uagb-notice-text\"><p>Past performance may not be indicative of future results. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended by InvesTech Research) will be profitable, equal any historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  <a href=\"https://ns2020-investech.investech.com/terms-of-use/\" target=\"_blank\" rel=\"noreferrer noopener\">Read full Disclosures here</a><a href=\"http://Past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk.  Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended by InvesTech Research) will be profitable, equal any historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.\" target=\"_blank\" rel=\"noreferrer noopener\">.</a></p></div></div>\n<!-- /wp:uagb/inline-notice -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:heading {\"level\":4} -->\n<h4>Excerpt from <em>InvesTech Research</em> - June 16, 2017</h4>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Also available to read in <a href=\"https://ns2020-investech.investech.com/wp-content/uploads/2020/08/IndexingFever.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF format</a></p>\n<!-- /wp:paragraph -->','Passive Investing: Inevitable Black Eye','Tempted by high-flying ETFs in this aging bull market? Just remember… Excitement is highest as the roller coaster goes over the top! In today’s technologically advanced world, featuring self-driving cars, pilotless airplanes, and smart homes, a “hands-off” trend is also gaining popularity among the investing public.','inherit','closed','closed','','2468-revision-v1','','','2021-07-20 22:42:27','2021-07-20 22:42:27','',2468,'https://ns2020-investech.investech.com/?p=9453',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9454,2,'2021-07-20 22:42:29','2021-07-20 22:42:29','<!-- wp:media-text {\"mediaPosition\":\"right\",\"mediaId\":9447,\"mediaLink\":\"https://ns2020-investech.investech.com/?attachment_id=9447\",\"mediaType\":\"image\",\"mediaWidth\":38} -->\n<div class=\"wp-block-media-text alignwide has-media-on-the-right is-stacked-on-mobile\" style=\"grid-template-columns:auto 38%\"><figure class=\"wp-block-media-text__media\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/rollercoaster-qac9Q3pWHWg-unsplash.jpg\" alt=\"\" class=\"wp-image-9447 size-full\"/></figure><div class=\"wp-block-media-text__content\"><!-- wp:heading -->\n<h2>Tempted by high-flying ETFs in this aging bull market? </h2>\n<!-- /wp:heading -->\n\n<!-- wp:heading -->\n<h2>Just remember… Excitement is highest as the roller coaster goes over the top!</h2>\n<!-- /wp:heading --></div></div>\n<!-- /wp:media-text -->\n\n<!-- wp:paragraph -->\n<p>In today’s technologically advanced world, featuring self-driving cars, pilotless airplanes, and smart homes, a “hands-off” trend is also gaining popularity among the investing public. As indicated by the headlines below, passive index investing has become all the rage, and Exchange Traded Funds (ETFs) are the tool of choice:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column {\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:66.66%\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>ETFs could see $1 trillion in inflows over the coming year</strong></p><cite>MarketWatch, 1/31/17</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:33.33%\"></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column {\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:33.33%\"></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:66.66%\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Small investors’ move to ‘passive’ stock funds becomes a stampede</strong> </p><cite>LA Times, 4/9/17</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column {\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:66.66%\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Global ETF assets reach $4tn</strong> </p><p><em>The global exchange traded fund industry smashed past $4tn in assets last month…</em> </p><cite>Financial Times, 5/10/17</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:33.33%\"></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns {\"verticalAlignment\":\"center\"} -->\n<div class=\"wp-block-columns are-vertically-aligned-center\"><!-- wp:column {\"verticalAlignment\":\"center\",\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column is-vertically-aligned-center\" style=\"flex-basis:33.33%\"><!-- wp:paragraph {\"placeholder\":\"Content…\"} -->\n<p>And our personal favorite...</p>\n<!-- /wp:paragraph --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"verticalAlignment\":\"center\",\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column is-vertically-aligned-center\" style=\"flex-basis:66.66%\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Wheee! A Quadruple-Leveraged S&amp;P 500 ETF is Here</strong></p><cite>Barron\'s, 5/3/17</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column -->\n<div class=\"wp-block-column\"><!-- wp:heading {\"level\":3} -->\n<h3>Exchange Traded Fund (ETF)</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The first Exchange Traded Fund (ETF) was launched in 1993, and although they were slow to start, ETFs have proliferated over the last decade, both in number (see graph at right) and the variety of index funds available. There’s now an ETF for nearly every strategy, no matter how esoteric, and that has helped fuel the passive investing craze.</p>\n<!-- /wp:paragraph --></div>\n<!-- /wp:column -->\n\n<!-- wp:column -->\n<div class=\"wp-block-column\"><!-- wp:image {\"align\":\"center\",\"id\":4829,\"sizeSlug\":\"full\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-full\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2020/12/number-of-etfs.png\" alt=\"Graph showing the number of ETFs (registered in the U.S.), Source: Investment Company Institute\" class=\"wp-image-4829\"/><figcaption>Number of ETFs (registered in the U.S.), Source: Investment Company Institute</figcaption></figure></div>\n<!-- /wp:image --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:paragraph -->\n<p>Over the past 24 years, one can see the shift in interest from actively managed mutual funds toward passive investing. As shown in the graph below, net cash flows into actively managed funds were still four times larger than passive funds from 1993 through 2000. From 2001 through 2008, a change becomes evident as net cash flows for active funds turned negative while passive funds continued to grow. The disparity between the active and passive net cash flows during the current bull market (2009-2016) is remarkable, and it shows why there’s been a parabolic increase in the number of ETFs!</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":4831,\"width\":713,\"height\":397} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2020/12/Active-vs-Passive-Stock-Funds-Inflows.png\" alt=\"Graph showing net cash flows into actively managed funds between 1993 and 2016.\" class=\"wp-image-4831\" width=\"713\" height=\"397\"/><figcaption>Active vs. Passive Domestic Stock Funds; Source: Investment Company Institute</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3><strong>So, why has passive investing become all the rage in recent years?</strong></h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Many investors have been burned –not once, but twice– by the Tech Bubble of the 1990s and the Housing Bubble in 2007. Also, they are frustrated with the challenges of managing investments… a task that in this uncertain bull market has frequently seemed counterproductive.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>The most popular index funds are touted as low-cost and broadly diversified, with a portfolio full of blue chip stocks. Moreover, ETFs offer “instant liquidity” with intraday trading compared to mutual funds that only settle at the end of each trading day. To the average investor, passive funds with minimal fees, implied safety, and lots of liquidity may appear to be the Holy Grail. As we’ll see, however, there is more to the story…</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:quote {\"align\":\"center\",\"className\":\"is-style-default\"} -->\n<blockquote class=\"wp-block-quote has-text-align-center is-style-default\"><p>Excitement is Highest as the Roller Coaster Goes Over the Top.</p><cite>– Anonymous</cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:media-text {\"mediaPosition\":\"right\",\"mediaId\":4839,\"mediaType\":\"image\",\"mediaWidth\":43,\"verticalAlignment\":\"center\"} -->\n<div class=\"wp-block-media-text alignwide has-media-on-the-right is-stacked-on-mobile is-vertically-aligned-center\" style=\"grid-template-columns:auto 43%\"><figure class=\"wp-block-media-text__media\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2020/12/Total-Assets-Domestic-Equity-Index-Funds.png\" alt=\"Graph showing the total assets in Domestic Equity Index Funds, 1990\'s to 2016\" class=\"wp-image-4839 size-full\"/></figure><div class=\"wp-block-media-text__content\"><!-- wp:paragraph -->\n<p>Just as the number of ETFs has grown, the past few years have witnessed an explosion in assets tied to passive investing that has extended to both mutual funds and ETFs (as shown in graph at right). A large part of the growth has been in ETFs, which are poised to overtake index mutual funds as the preferred indexing vehicle. Both types of products have doubled in assets just since 2012.</p>\n<!-- /wp:paragraph --></div></div>\n<!-- /wp:media-text -->\n\n<!-- wp:paragraph -->\n<p>It is important to recognize that passive investing is not a fresh new idea; in fact, the concept was introduced by John Bogle (the founder of Vanguard) in the 1970s. This strategy has shifted in and out of favor, becoming more popular as bull markets age and losing its luster only after the damage has been done by the next bear market. Just like riding a roller coaster, the peak in public enthusiasm often comes as the bull market is cresting the top.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>A Trip Back in Time…</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The rise in the popularity of index funds has been seen before.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:quote {\"align\":\"center\"} -->\n<blockquote class=\"wp-block-quote has-text-align-center\"><p>It’s like deja vu all over again.</p><cite>- Yogi Berra</cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>The late 1990s: </h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>As the decade of the 1990s became the longest bull market in Wall Street history, the Tech Bubble wasn’t the only phenomenon catching investors’ attention. In 1998-99, headlines were touting the benefit of index investing as inflows reached record levels:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column -->\n<div class=\"wp-block-column\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><em>Saving for Retirement</em> <strong>Index Fever</strong></p><cite> Fortune, 11/9/98</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column -->\n\n<!-- wp:column -->\n<div class=\"wp-block-column\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Who Needs a Money Manager?</strong></p><cite>Business Week 2/22/99</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns {\"verticalAlignment\":\"center\"} -->\n<div class=\"wp-block-columns are-vertically-aligned-center\"><!-- wp:column {\"verticalAlignment\":\"center\",\"width\":\"\"} -->\n<div class=\"wp-block-column is-vertically-aligned-center\"><!-- wp:paragraph -->\n<p>In March 1999, InvesTech Research published the issue shown at right, <a href=\"https://ns2020-investech.investech.com/subscriber-library/lemming-principle/\">comparing the emotional influx of index investors to lemmings</a>. However, instead of falling off a cliff, index investors fell into the largest bear market since the 1930s (the S&amp;P 500 Index lost -49.1%).</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>2006-07:</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p><strong>Fast-forward to 2006-07:</strong> Index investing was even <em>more</em> popular at the peak of the last bull market (also one of the longer bull markets of the past 80 years):</p>\n<!-- /wp:paragraph --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"verticalAlignment\":\"center\",\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column is-vertically-aligned-center\" style=\"flex-basis:33.33%\"><!-- wp:image {\"align\":\"center\",\"id\":4840,\"width\":195,\"height\":201,\"sizeSlug\":\"medium\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-medium is-resized\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2020/12/V99I04-216x300.png\" alt=\"InvesTech Research newsletter, &quot;The Lemming Principle,&quot; March 12, 1999\" class=\"wp-image-4840\" width=\"195\" height=\"201\"/><figcaption>InvesTech Research newsletter, \"The Lemming Principle,\" March 12, 1999</figcaption></figure></div>\n<!-- /wp:image --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column {\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:66.66%\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Index Funds: So Hot Right Now</strong></p><cite>The Motley Fool, 12/11/06</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:33.33%\"></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column {\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:33.33%\"></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:66.66%\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Index funds help you avoid risks of stock selection, market timing</strong></p><cite>Boston Globe, 2/27/07</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column {\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:66.66%\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Owning the S&amp;P 500 is cheap, easy and smart</strong></p><cite>USA Today, 7/20/07</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:33.33%\"></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:block {\"ref\":5343} /-->\n\n<!-- wp:paragraph -->\n<p>In these previous periods, much like today, most investors perceived index funds – particularly the S&amp;P 500 Index funds – to be more diversified, safer investments.  We’ll discuss why index funds may not be all they’re thought to be…</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>The Dark Side of Passive Investing – Live by the Index, Die by the Index</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>As noted, history shows that index investing reaches the highest level of popularity in aging bull markets or near market peaks. The reason for this is that any type of “risk management” during a bull market tends to reduce or moderate a fund manager’s return. Consequently, it is not uncommon for a fully invested S&amp;P 500 Index fund to outperform most actively managed mutual funds and money managers when measured <em><strong>solely </strong></em>over the duration of a bull market.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>There are multiple reasons index or passive investing becomes more popular in an aging bull market. First, it is more comfortable. One doesn’t have the burden of making decisions about which stocks to invest in, or when to sell a stock if it rises or falls precipitously. Indexing also tends to remove the regret from bad decisions, because any loss can be attributed entirely to the market. Lastly, investing in an index fund is the cheapest and easiest way to take advantage of the market’s stellar gains which <em><strong>seem </strong></em>likely to continue. Yet before jumping into the indexing mania today, consider these inherent risks in passive investing…</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li><strong>By definition, index funds also guarantee that you will suffer 100% of the next bear market’s decline.</strong> Regardless of which index you are matching, the index fund is required to stay fully invested regardless of market risk or volatility.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li><strong>Assets flowing into the most popular index funds are funneling investments into the largest and most overvalued stocks in the market, driving them higher. </strong>The S&amp;P 500 is a capitalization weighted index, so money invested into these popular index funds is not evenly distributed in all 500 stocks. Rather, the largest companies by market cap receive a disproportionate amount of the investment. As a result, investors must take the good with the bad and favor the largest companies within the basket of 500 stocks, regardless of valuation and financial strength (or lack thereof).</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li><strong>Market volatility increases when interest narrows to the index heavyweights. </strong>Only 50 stocks account for nearly 50% of S&amp;P 500 capitalization and one-half of an index fund’s portfolio. Additionally, the top 10 largest stocks comprise over 20% of the Index. As a result, downside risk in the next bear market could increase if selling pressure hits the largest stocks at the same time. The increased focus on index investing of late may very well increase both the size of, and speed at which the next bear market decline occurs.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:image {\"align\":\"right\",\"id\":8324,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"alignright size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/06/iShares-Core-SP-500-ETF.jpg\" alt=\"\" class=\"wp-image-8324\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li><strong>Intraday liquidity for ETFs can experience dramatic structural challenges in times of market distress. </strong>For example, during the market dislocation on August 24, 2015 the liquidity of most ETFs all but dried up just as the market opened. A confluence of problems –including circuit breakers, an obscure NYSE rule allowing market makers to delay posting prices, and a lack of futures data for large hedgers– all combined to take the bid out of the ETF space. Even large, well-established ETFs like the $116 billion iShares Core S&amp;P 500 ETF (IVV) saw unprecedented declines. As shown on the graph at right, IVV fell -26% on the open, far more than the -5.3% drop of the underlying S&amp;P 500. As a result of this liquidity hiccup, or “flash crash” as it was called at the time, investors with outstanding market orders and stop-loss orders sold their shares in IVV for far less than their worth.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Bottom Line</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The broad diversification and implied liquidity offered by index ETFs gives many investors a false sense of security. When passively investing in an index, devoid of risk management, investors are still subject to varying degrees of valuation and liquidity risk, and they bear the full brunt of cyclical market risk.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>Risk Management is Vital to any Strategy – <em>Ignore at your own peril!</em></h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Many actively managed mutual funds and money managers take some steps to mitigate portfolio risk – at times to the detriment of bull market performance. Although passive indexing may appear to be easier and is also perceived to reduce risk, it ends up having the opposite effect during major downturns as it guarantees an investor will experience <strong><em>all </em></strong>of the losses in the corresponding market index. Remember, long-term performance is dependent not only on how much you make in the bull markets, but also how much you give back in the bear markets. Investments that are weighted toward the largest, most overvalued stocks and sectors are exactly the opposite of what might be used in a strategy that manages risk.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Index investing proponents generally downplay stock market cycles, but bear market survivability is a very real issue for many investors, particularly those in or nearing retirement. The decision to hold the course on an investment strategy usually depends on the severity of bear market losses and how long one’s portfolio remains underwater… in other words, how much time it takes to recover those losses.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>To effectively demonstrate this concept, the <strong>Ulcer Index </strong>was developed in 1987 by Peter Martin to measure the depth and duration of drawdowns from earlier highs in one’s portfolio. It provides a graphic illustration of the level of stress and ulcers (hence the name) that can emerge from suffering deep, prolonged losses in one’s retirement savings.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Shown below are the comparative Ulcer Index graphs of the InvesTech Model Portfolio versus the Vanguard Total Stock Market Index (VTSMX), which is the largest and most popular fund on the market today.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":8329,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/06/IT-Portfolio-vs-Vanguard-Ulcer-Index.jpg\" alt=\"\" class=\"wp-image-8329\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>The starts of the last two bear markets are noted in March 2000 and October 2007, as well as their subsequent market bottoms in October 2002 and March 2009. The green dashed lines illustrate the number of months required after the market bottom for one’s portfolio to recover the losses. Above all, the red shaded areas designate how long, and how deep one’s portfolio was underwater. These are the so-called “ulcer” zones when an investor must wait and wonder how long it will be before his portfolio is whole again.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>As you’ll note, InvesTech’s “risk management” strategy dramatically reduced the stress of the last two generational bear markets by limiting the time spent in the “ulcer” zones. While the InvesTech Model Portfolio didn’t outperform the Vanguard Total Stock Market Index Fund in the bull markets, our ability to manage and reduce risk provided a long-term return which more than doubled that of the Vanguard index fund. More importantly, InvesTech subscribers lost significantly less and recovered much more quickly during bear markets, avoiding the urge to panic out of the market at the wrong time.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>It is this combination of achieving safe returns and managing downside risk that matters most in the long-term performance of one’s portfolio… and in the survivability of bear markets.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:uagb/inline-notice {\"block_id\":\"d8f90386\",\"noticeContent\":\"\\u003cp\\u003ePast performance may not be indicative of future results. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended by InvesTech Research) will be profitable, equal any historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  \\u003ca href=\\u0022https://ns2020-investech.investech.com/terms-of-use/\\u0022 target=\\u0022_blank\\u0022 rel=\\u0022noreferrer noopener\\u0022\\u003eRead full Disclosures here\\u003c/a\\u003e\\u003ca href=\\u0022http://Past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk.  Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended by InvesTech Research) will be profitable, equal any historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.\\u0022 target=\\u0022_blank\\u0022 rel=\\u0022noreferrer noopener\\u0022\\u003e.\\u003c/a\\u003e\\u003c/p\\u003e\"} -->\n<div class=\"wp-block-uagb-inline-notice uagb-inline_notice__outer-wrap uagb-inline_notice__align-left uagb-block-d8f90386\"><h4 class=\"uagb-notice-title\">Important Disclosure Information</h4><div class=\"uagb-notice-text\"><p>Past performance may not be indicative of future results. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended by InvesTech Research) will be profitable, equal any historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  <a href=\"https://ns2020-investech.investech.com/terms-of-use/\" target=\"_blank\" rel=\"noreferrer noopener\">Read full Disclosures here</a><a href=\"http://Past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk.  Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended by InvesTech Research) will be profitable, equal any historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.\" target=\"_blank\" rel=\"noreferrer noopener\">.</a></p></div></div>\n<!-- /wp:uagb/inline-notice -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:heading {\"level\":4} -->\n<h4>Excerpt from <em>InvesTech Research</em> - June 16, 2017</h4>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Also available to read in <a href=\"https://ns2020-investech.investech.com/wp-content/uploads/2020/08/IndexingFever.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF format</a></p>\n<!-- /wp:paragraph -->','Passive Investing: Inevitable Black Eye','Tempted by high-flying ETFs in this aging bull market? Just remember… Excitement is highest as the roller coaster goes over the top! In today’s technologically advanced world, featuring self-driving cars, pilotless airplanes, and smart homes, a “hands-off” trend is also gaining popularity among the investing public.','inherit','closed','closed','','2468-revision-v1','','','2021-07-20 22:42:29','2021-07-20 22:42:29','',2468,'https://ns2020-investech.investech.com/?p=9454',0,'revision','',0);
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INSERT INTO `wp_posts` VALUES (9458,2,'2021-07-20 22:45:07','2021-07-20 22:45:07','','Total-Assets-Domestic-Equity-Index-Funds','','inherit','closed','closed','','total-assets-domestic-equity-index-funds-2','','','2021-07-20 22:45:07','2021-07-20 22:45:07','',9376,'https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Total-Assets-Domestic-Equity-Index-Funds.png',0,'attachment','image/png',0);
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INSERT INTO `wp_posts` VALUES (9462,2,'2021-07-20 22:49:28','2021-07-20 22:49:28','<!-- wp:media-text {\"mediaPosition\":\"right\",\"mediaId\":9447,\"mediaLink\":\"https://ns2020-investech.investech.com/?attachment_id=9447\",\"mediaType\":\"image\",\"mediaWidth\":38} -->\n<div class=\"wp-block-media-text alignwide has-media-on-the-right is-stacked-on-mobile\" style=\"grid-template-columns:auto 38%\"><figure class=\"wp-block-media-text__media\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/rollercoaster-qac9Q3pWHWg-unsplash.jpg\" alt=\"\" class=\"wp-image-9447 size-full\"/></figure><div class=\"wp-block-media-text__content\"><!-- wp:heading -->\n<h2>Tempted by high-flying ETFs in this aging bull market? </h2>\n<!-- /wp:heading -->\n\n<!-- wp:heading -->\n<h2>Just remember… Excitement is highest as the roller coaster goes over the top!</h2>\n<!-- /wp:heading --></div></div>\n<!-- /wp:media-text -->\n\n<!-- wp:paragraph -->\n<p>In today’s technologically advanced world, featuring self-driving cars, pilotless airplanes, and smart homes, a “hands-off” trend is also gaining popularity among the investing public. As indicated by the headlines below, passive index investing has become all the rage, and Exchange Traded Funds (ETFs) are the tool of choice:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column {\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:66.66%\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>ETFs could see $1 trillion in inflows over the coming year</strong></p><cite>MarketWatch, 1/31/17</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:33.33%\"></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column {\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:33.33%\"></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:66.66%\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Small investors’ move to ‘passive’ stock funds becomes a stampede</strong> </p><cite>LA Times, 4/9/17</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column {\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:66.66%\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Global ETF assets reach $4tn</strong> </p><p><em>The global exchange traded fund industry smashed past $4tn in assets last month…</em> </p><cite>Financial Times, 5/10/17</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:33.33%\"></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns {\"verticalAlignment\":\"center\"} -->\n<div class=\"wp-block-columns are-vertically-aligned-center\"><!-- wp:column {\"verticalAlignment\":\"center\",\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column is-vertically-aligned-center\" style=\"flex-basis:33.33%\"><!-- wp:paragraph {\"placeholder\":\"Content…\"} -->\n<p>And our personal favorite...</p>\n<!-- /wp:paragraph --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"verticalAlignment\":\"center\",\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column is-vertically-aligned-center\" style=\"flex-basis:66.66%\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Wheee! A Quadruple-Leveraged S&amp;P 500 ETF is Here</strong></p><cite>Barron\'s, 5/3/17</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column -->\n<div class=\"wp-block-column\"><!-- wp:heading {\"level\":3} -->\n<h3>Exchange Traded Fund (ETF)</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The first Exchange Traded Fund (ETF) was launched in 1993, and although they were slow to start, ETFs have proliferated over the last decade, both in number (see graph at right) and the variety of index funds available. There’s now an ETF for nearly every strategy, no matter how esoteric, and that has helped fuel the passive investing craze.</p>\n<!-- /wp:paragraph --></div>\n<!-- /wp:column -->\n\n<!-- wp:column -->\n<div class=\"wp-block-column\"><!-- wp:image {\"align\":\"center\",\"id\":9460,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Number-of-ETFs.png\" alt=\"\" class=\"wp-image-9460\"/><figcaption>Number of ETFs (registered in the U.S.), Source: Investment Company Institute</figcaption></figure></div>\n<!-- /wp:image --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:paragraph -->\n<p>Over the past 24 years, one can see the shift in interest from actively managed mutual funds toward passive investing. As shown in the graph below, net cash flows into actively managed funds were still four times larger than passive funds from 1993 through 2000. From 2001 through 2008, a change becomes evident as net cash flows for active funds turned negative while passive funds continued to grow. The disparity between the active and passive net cash flows during the current bull market (2009-2016) is remarkable, and it shows why there’s been a parabolic increase in the number of ETFs!</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9459,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Active-vs-Passive-Stock-Funds-Inflows.png\" alt=\"\" class=\"wp-image-9459\"/><figcaption>Active vs. Passive Domestic Stock Funds; Source: Investment Company Institute</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3><strong>So, why has passive investing become all the rage in recent years?</strong></h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Many investors have been burned –not once, but twice– by the Tech Bubble of the 1990s and the Housing Bubble in 2007. Also, they are frustrated with the challenges of managing investments… a task that in this uncertain bull market has frequently seemed counterproductive.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>The most popular index funds are touted as low-cost and broadly diversified, with a portfolio full of blue chip stocks. Moreover, ETFs offer “instant liquidity” with intraday trading compared to mutual funds that only settle at the end of each trading day. To the average investor, passive funds with minimal fees, implied safety, and lots of liquidity may appear to be the Holy Grail. As we’ll see, however, there is more to the story…</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:quote {\"align\":\"center\",\"className\":\"is-style-default\"} -->\n<blockquote class=\"wp-block-quote has-text-align-center is-style-default\"><p>Excitement is Highest as the Roller Coaster Goes Over the Top.</p><cite>– Anonymous</cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:media-text {\"mediaPosition\":\"right\",\"mediaId\":9458,\"mediaLink\":\"https://ns2020-investech.investech.com/?attachment_id=9458\",\"mediaType\":\"image\",\"mediaWidth\":43,\"verticalAlignment\":\"center\"} -->\n<div class=\"wp-block-media-text alignwide has-media-on-the-right is-stacked-on-mobile is-vertically-aligned-center\" style=\"grid-template-columns:auto 43%\"><figure class=\"wp-block-media-text__media\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Total-Assets-Domestic-Equity-Index-Funds.png\" alt=\"\" class=\"wp-image-9458 size-full\"/></figure><div class=\"wp-block-media-text__content\"><!-- wp:paragraph -->\n<p>Just as the number of ETFs has grown, the past few years have witnessed an explosion in assets tied to passive investing that has extended to both mutual funds and ETFs (as shown in graph at right). A large part of the growth has been in ETFs, which are poised to overtake index mutual funds as the preferred indexing vehicle. Both types of products have doubled in assets just since 2012.</p>\n<!-- /wp:paragraph --></div></div>\n<!-- /wp:media-text -->\n\n<!-- wp:paragraph -->\n<p>It is important to recognize that passive investing is not a fresh new idea; in fact, the concept was introduced by John Bogle (the founder of Vanguard) in the 1970s. This strategy has shifted in and out of favor, becoming more popular as bull markets age and losing its luster only after the damage has been done by the next bear market. Just like riding a roller coaster, the peak in public enthusiasm often comes as the bull market is cresting the top.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>A Trip Back in Time…</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The rise in the popularity of index funds has been seen before.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:quote {\"align\":\"center\"} -->\n<blockquote class=\"wp-block-quote has-text-align-center\"><p>It’s like deja vu all over again.</p><cite>- Yogi Berra</cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>The late 1990s: </h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>As the decade of the 1990s became the longest bull market in Wall Street history, the Tech Bubble wasn’t the only phenomenon catching investors’ attention. In 1998-99, headlines were touting the benefit of index investing as inflows reached record levels:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column -->\n<div class=\"wp-block-column\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><em>Saving for Retirement</em> <strong>Index Fever</strong></p><cite> Fortune, 11/9/98</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column -->\n\n<!-- wp:column -->\n<div class=\"wp-block-column\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Who Needs a Money Manager?</strong></p><cite>Business Week 2/22/99</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns {\"verticalAlignment\":\"center\"} -->\n<div class=\"wp-block-columns are-vertically-aligned-center\"><!-- wp:column {\"verticalAlignment\":\"center\",\"width\":\"\"} -->\n<div class=\"wp-block-column is-vertically-aligned-center\"><!-- wp:paragraph -->\n<p>In March 1999, InvesTech Research published the issue shown at right, <a href=\"https://ns2020-investech.investech.com/subscriber-library/lemming-principle/\">comparing the emotional influx of index investors to lemmings</a>. However, instead of falling off a cliff, index investors fell into the largest bear market since the 1930s (the S&amp;P 500 Index lost -49.1%).</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>2006-07:</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p><strong>Fast-forward to 2006-07:</strong> Index investing was even <em>more</em> popular at the peak of the last bull market (also one of the longer bull markets of the past 80 years):</p>\n<!-- /wp:paragraph --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"verticalAlignment\":\"center\",\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column is-vertically-aligned-center\" style=\"flex-basis:33.33%\"><!-- wp:image {\"align\":\"center\",\"id\":9457,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/V99I04.png\" alt=\"\" class=\"wp-image-9457\"/><figcaption>InvesTech Research newsletter, \"The Lemming Principle,\" March 12, 1999</figcaption></figure></div>\n<!-- /wp:image --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column {\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:66.66%\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Index Funds: So Hot Right Now</strong></p><cite>The Motley Fool, 12/11/06</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:33.33%\"></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column {\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:33.33%\"></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:66.66%\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Index funds help you avoid risks of stock selection, market timing</strong></p><cite>Boston Globe, 2/27/07</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column {\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:66.66%\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Owning the S&amp;P 500 is cheap, easy and smart</strong></p><cite>USA Today, 7/20/07</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:33.33%\"></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:block {\"ref\":5343} /-->\n\n<!-- wp:paragraph -->\n<p>In these previous periods, much like today, most investors perceived index funds – particularly the S&amp;P 500 Index funds – to be more diversified, safer investments.  We’ll discuss why index funds may not be all they’re thought to be…</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>The Dark Side of Passive Investing – Live by the Index, Die by the Index</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>As noted, history shows that index investing reaches the highest level of popularity in aging bull markets or near market peaks. The reason for this is that any type of “risk management” during a bull market tends to reduce or moderate a fund manager’s return. Consequently, it is not uncommon for a fully invested S&amp;P 500 Index fund to outperform most actively managed mutual funds and money managers when measured <em><strong>solely </strong></em>over the duration of a bull market.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>There are multiple reasons index or passive investing becomes more popular in an aging bull market. First, it is more comfortable. One doesn’t have the burden of making decisions about which stocks to invest in, or when to sell a stock if it rises or falls precipitously. Indexing also tends to remove the regret from bad decisions, because any loss can be attributed entirely to the market. Lastly, investing in an index fund is the cheapest and easiest way to take advantage of the market’s stellar gains which <em><strong>seem </strong></em>likely to continue. Yet before jumping into the indexing mania today, consider these inherent risks in passive investing…</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li><strong>By definition, index funds also guarantee that you will suffer 100% of the next bear market’s decline.</strong> Regardless of which index you are matching, the index fund is required to stay fully invested regardless of market risk or volatility.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li><strong>Assets flowing into the most popular index funds are funneling investments into the largest and most overvalued stocks in the market, driving them higher. </strong>The S&amp;P 500 is a capitalization weighted index, so money invested into these popular index funds is not evenly distributed in all 500 stocks. Rather, the largest companies by market cap receive a disproportionate amount of the investment. As a result, investors must take the good with the bad and favor the largest companies within the basket of 500 stocks, regardless of valuation and financial strength (or lack thereof).</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li><strong>Market volatility increases when interest narrows to the index heavyweights. </strong>Only 50 stocks account for nearly 50% of S&amp;P 500 capitalization and one-half of an index fund’s portfolio. Additionally, the top 10 largest stocks comprise over 20% of the Index. As a result, downside risk in the next bear market could increase if selling pressure hits the largest stocks at the same time. The increased focus on index investing of late may very well increase both the size of, and speed at which the next bear market decline occurs.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:image {\"align\":\"right\",\"id\":9456,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"alignright size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/iShares-Core-SP-500-ETF.jpg\" alt=\"\" class=\"wp-image-9456\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li><strong>Intraday liquidity for ETFs can experience dramatic structural challenges in times of market distress. </strong>For example, during the market dislocation on August 24, 2015 the liquidity of most ETFs all but dried up just as the market opened. A confluence of problems –including circuit breakers, an obscure NYSE rule allowing market makers to delay posting prices, and a lack of futures data for large hedgers– all combined to take the bid out of the ETF space. Even large, well-established ETFs like the $116 billion iShares Core S&amp;P 500 ETF (IVV) saw unprecedented declines. As shown on the graph at right, IVV fell -26% on the open, far more than the -5.3% drop of the underlying S&amp;P 500. As a result of this liquidity hiccup, or “flash crash” as it was called at the time, investors with outstanding market orders and stop-loss orders sold their shares in IVV for far less than their worth.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Bottom Line</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The broad diversification and implied liquidity offered by index ETFs gives many investors a false sense of security. When passively investing in an index, devoid of risk management, investors are still subject to varying degrees of valuation and liquidity risk, and they bear the full brunt of cyclical market risk.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>Risk Management is Vital to any Strategy – <em>Ignore at your own peril!</em></h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Many actively managed mutual funds and money managers take some steps to mitigate portfolio risk – at times to the detriment of bull market performance. Although passive indexing may appear to be easier and is also perceived to reduce risk, it ends up having the opposite effect during major downturns as it guarantees an investor will experience <strong><em>all </em></strong>of the losses in the corresponding market index. Remember, long-term performance is dependent not only on how much you make in the bull markets, but also how much you give back in the bear markets. Investments that are weighted toward the largest, most overvalued stocks and sectors are exactly the opposite of what might be used in a strategy that manages risk.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Index investing proponents generally downplay stock market cycles, but bear market survivability is a very real issue for many investors, particularly those in or nearing retirement. The decision to hold the course on an investment strategy usually depends on the severity of bear market losses and how long one’s portfolio remains underwater… in other words, how much time it takes to recover those losses.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>To effectively demonstrate this concept, the <strong>Ulcer Index </strong>was developed in 1987 by Peter Martin to measure the depth and duration of drawdowns from earlier highs in one’s portfolio. It provides a graphic illustration of the level of stress and ulcers (hence the name) that can emerge from suffering deep, prolonged losses in one’s retirement savings.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Shown below are the comparative Ulcer Index graphs of the InvesTech Model Portfolio versus the Vanguard Total Stock Market Index (VTSMX), which is the largest and most popular fund on the market today.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9455,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/IT-Portfolio-vs-Vanguard-Ulcer-Index.jpg\" alt=\"\" class=\"wp-image-9455\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>The starts of the last two bear markets are noted in March 2000 and October 2007, as well as their subsequent market bottoms in October 2002 and March 2009. The green dashed lines illustrate the number of months required after the market bottom for one’s portfolio to recover the losses. Above all, the red shaded areas designate how long, and how deep one’s portfolio was underwater. These are the so-called “ulcer” zones when an investor must wait and wonder how long it will be before his portfolio is whole again.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>As you’ll note, InvesTech’s “risk management” strategy dramatically reduced the stress of the last two generational bear markets by limiting the time spent in the “ulcer” zones. While the InvesTech Model Portfolio didn’t outperform the Vanguard Total Stock Market Index Fund in the bull markets, our ability to manage and reduce risk provided a long-term return which more than doubled that of the Vanguard index fund. More importantly, InvesTech subscribers lost significantly less and recovered much more quickly during bear markets, avoiding the urge to panic out of the market at the wrong time.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>It is this combination of achieving safe returns and managing downside risk that matters most in the long-term performance of one’s portfolio… and in the survivability of bear markets.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:uagb/inline-notice {\"block_id\":\"d8f90386\",\"noticeContent\":\"\\u003cp\\u003ePast performance may not be indicative of future results. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended by InvesTech Research) will be profitable, equal any historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  \\u003ca href=\\u0022https://ns2020-investech.investech.com/terms-of-use/\\u0022 target=\\u0022_blank\\u0022 rel=\\u0022noreferrer noopener\\u0022\\u003eRead full Disclosures here\\u003c/a\\u003e\\u003ca href=\\u0022http://Past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk.  Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended by InvesTech Research) will be profitable, equal any historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.\\u0022 target=\\u0022_blank\\u0022 rel=\\u0022noreferrer noopener\\u0022\\u003e.\\u003c/a\\u003e\\u003c/p\\u003e\"} -->\n<div class=\"wp-block-uagb-inline-notice uagb-inline_notice__outer-wrap uagb-inline_notice__align-left uagb-block-d8f90386\"><h4 class=\"uagb-notice-title\">Important Disclosure Information</h4><div class=\"uagb-notice-text\"><p>Past performance may not be indicative of future results. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended by InvesTech Research) will be profitable, equal any historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  <a href=\"https://ns2020-investech.investech.com/terms-of-use/\" target=\"_blank\" rel=\"noreferrer noopener\">Read full Disclosures here</a><a href=\"http://Past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk.  Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended by InvesTech Research) will be profitable, equal any historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.\" target=\"_blank\" rel=\"noreferrer noopener\">.</a></p></div></div>\n<!-- /wp:uagb/inline-notice -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:heading {\"level\":4} -->\n<h4>Excerpt from <em>InvesTech Research</em> - June 16, 2017</h4>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Also available to read in <a href=\"https://ns2020-investech.investech.com/wp-content/uploads/2020/08/IndexingFever.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF format</a></p>\n<!-- /wp:paragraph -->','Passive Investing: Inevitable Black Eye','Tempted by high-flying ETFs in this aging bull market? Just remember… Excitement is highest as the roller coaster goes over the top! In today’s technologically advanced world, featuring self-driving cars, pilotless airplanes, and smart homes, a “hands-off” trend is also gaining popularity among the investing public.','inherit','closed','closed','','2468-revision-v1','','','2021-07-20 22:49:28','2021-07-20 22:49:28','',2468,'https://ns2020-investech.investech.com/?p=9462',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9463,2,'2021-07-20 22:49:31','2021-07-20 22:49:31','<!-- wp:media-text {\"mediaPosition\":\"right\",\"mediaId\":9447,\"mediaLink\":\"https://ns2020-investech.investech.com/?attachment_id=9447\",\"mediaType\":\"image\",\"mediaWidth\":38} -->\n<div class=\"wp-block-media-text alignwide has-media-on-the-right is-stacked-on-mobile\" style=\"grid-template-columns:auto 38%\"><figure class=\"wp-block-media-text__media\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/rollercoaster-qac9Q3pWHWg-unsplash.jpg\" alt=\"\" class=\"wp-image-9447 size-full\"/></figure><div class=\"wp-block-media-text__content\"><!-- wp:heading -->\n<h2>Tempted by high-flying ETFs in this aging bull market? </h2>\n<!-- /wp:heading -->\n\n<!-- wp:heading -->\n<h2>Just remember… Excitement is highest as the roller coaster goes over the top!</h2>\n<!-- /wp:heading --></div></div>\n<!-- /wp:media-text -->\n\n<!-- wp:paragraph -->\n<p>In today’s technologically advanced world, featuring self-driving cars, pilotless airplanes, and smart homes, a “hands-off” trend is also gaining popularity among the investing public. As indicated by the headlines below, passive index investing has become all the rage, and Exchange Traded Funds (ETFs) are the tool of choice:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column {\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:66.66%\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>ETFs could see $1 trillion in inflows over the coming year</strong></p><cite>MarketWatch, 1/31/17</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:33.33%\"></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column {\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:33.33%\"></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:66.66%\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Small investors’ move to ‘passive’ stock funds becomes a stampede</strong> </p><cite>LA Times, 4/9/17</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column {\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:66.66%\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Global ETF assets reach $4tn</strong> </p><p><em>The global exchange traded fund industry smashed past $4tn in assets last month…</em> </p><cite>Financial Times, 5/10/17</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:33.33%\"></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns {\"verticalAlignment\":\"center\"} -->\n<div class=\"wp-block-columns are-vertically-aligned-center\"><!-- wp:column {\"verticalAlignment\":\"center\",\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column is-vertically-aligned-center\" style=\"flex-basis:33.33%\"><!-- wp:paragraph {\"placeholder\":\"Content…\"} -->\n<p>And our personal favorite...</p>\n<!-- /wp:paragraph --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"verticalAlignment\":\"center\",\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column is-vertically-aligned-center\" style=\"flex-basis:66.66%\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Wheee! A Quadruple-Leveraged S&amp;P 500 ETF is Here</strong></p><cite>Barron\'s, 5/3/17</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column -->\n<div class=\"wp-block-column\"><!-- wp:heading {\"level\":3} -->\n<h3>Exchange Traded Fund (ETF)</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The first Exchange Traded Fund (ETF) was launched in 1993, and although they were slow to start, ETFs have proliferated over the last decade, both in number (see graph at right) and the variety of index funds available. There’s now an ETF for nearly every strategy, no matter how esoteric, and that has helped fuel the passive investing craze.</p>\n<!-- /wp:paragraph --></div>\n<!-- /wp:column -->\n\n<!-- wp:column -->\n<div class=\"wp-block-column\"><!-- wp:image {\"align\":\"center\",\"id\":9460,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Number-of-ETFs.png\" alt=\"\" class=\"wp-image-9460\"/><figcaption>Number of ETFs (registered in the U.S.), Source: Investment Company Institute</figcaption></figure></div>\n<!-- /wp:image --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:paragraph -->\n<p>Over the past 24 years, one can see the shift in interest from actively managed mutual funds toward passive investing. As shown in the graph below, net cash flows into actively managed funds were still four times larger than passive funds from 1993 through 2000. From 2001 through 2008, a change becomes evident as net cash flows for active funds turned negative while passive funds continued to grow. The disparity between the active and passive net cash flows during the current bull market (2009-2016) is remarkable, and it shows why there’s been a parabolic increase in the number of ETFs!</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9459,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Active-vs-Passive-Stock-Funds-Inflows.png\" alt=\"\" class=\"wp-image-9459\"/><figcaption>Active vs. Passive Domestic Stock Funds; Source: Investment Company Institute</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3><strong>So, why has passive investing become all the rage in recent years?</strong></h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Many investors have been burned –not once, but twice– by the Tech Bubble of the 1990s and the Housing Bubble in 2007. Also, they are frustrated with the challenges of managing investments… a task that in this uncertain bull market has frequently seemed counterproductive.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>The most popular index funds are touted as low-cost and broadly diversified, with a portfolio full of blue chip stocks. Moreover, ETFs offer “instant liquidity” with intraday trading compared to mutual funds that only settle at the end of each trading day. To the average investor, passive funds with minimal fees, implied safety, and lots of liquidity may appear to be the Holy Grail. As we’ll see, however, there is more to the story…</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:quote {\"align\":\"center\",\"className\":\"is-style-default\"} -->\n<blockquote class=\"wp-block-quote has-text-align-center is-style-default\"><p>Excitement is Highest as the Roller Coaster Goes Over the Top.</p><cite>– Anonymous</cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:media-text {\"mediaPosition\":\"right\",\"mediaId\":9458,\"mediaLink\":\"https://ns2020-investech.investech.com/?attachment_id=9458\",\"mediaType\":\"image\",\"mediaWidth\":43,\"verticalAlignment\":\"center\"} -->\n<div class=\"wp-block-media-text alignwide has-media-on-the-right is-stacked-on-mobile is-vertically-aligned-center\" style=\"grid-template-columns:auto 43%\"><figure class=\"wp-block-media-text__media\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Total-Assets-Domestic-Equity-Index-Funds.png\" alt=\"\" class=\"wp-image-9458 size-full\"/></figure><div class=\"wp-block-media-text__content\"><!-- wp:paragraph -->\n<p>Just as the number of ETFs has grown, the past few years have witnessed an explosion in assets tied to passive investing that has extended to both mutual funds and ETFs (as shown in graph at right). A large part of the growth has been in ETFs, which are poised to overtake index mutual funds as the preferred indexing vehicle. Both types of products have doubled in assets just since 2012.</p>\n<!-- /wp:paragraph --></div></div>\n<!-- /wp:media-text -->\n\n<!-- wp:paragraph -->\n<p>It is important to recognize that passive investing is not a fresh new idea; in fact, the concept was introduced by John Bogle (the founder of Vanguard) in the 1970s. This strategy has shifted in and out of favor, becoming more popular as bull markets age and losing its luster only after the damage has been done by the next bear market. Just like riding a roller coaster, the peak in public enthusiasm often comes as the bull market is cresting the top.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>A Trip Back in Time…</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The rise in the popularity of index funds has been seen before.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:quote {\"align\":\"center\"} -->\n<blockquote class=\"wp-block-quote has-text-align-center\"><p>It’s like deja vu all over again.</p><cite>- Yogi Berra</cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>The late 1990s: </h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>As the decade of the 1990s became the longest bull market in Wall Street history, the Tech Bubble wasn’t the only phenomenon catching investors’ attention. In 1998-99, headlines were touting the benefit of index investing as inflows reached record levels:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column -->\n<div class=\"wp-block-column\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><em>Saving for Retirement</em> <strong>Index Fever</strong></p><cite> Fortune, 11/9/98</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column -->\n\n<!-- wp:column -->\n<div class=\"wp-block-column\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Who Needs a Money Manager?</strong></p><cite>Business Week 2/22/99</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns {\"verticalAlignment\":\"center\"} -->\n<div class=\"wp-block-columns are-vertically-aligned-center\"><!-- wp:column {\"verticalAlignment\":\"center\",\"width\":\"\"} -->\n<div class=\"wp-block-column is-vertically-aligned-center\"><!-- wp:paragraph -->\n<p>In March 1999, InvesTech Research published the issue shown at right, <a href=\"https://ns2020-investech.investech.com/subscriber-library/lemming-principle/\">comparing the emotional influx of index investors to lemmings</a>. However, instead of falling off a cliff, index investors fell into the largest bear market since the 1930s (the S&amp;P 500 Index lost -49.1%).</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>2006-07:</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p><strong>Fast-forward to 2006-07:</strong> Index investing was even <em>more</em> popular at the peak of the last bull market (also one of the longer bull markets of the past 80 years):</p>\n<!-- /wp:paragraph --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"verticalAlignment\":\"center\",\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column is-vertically-aligned-center\" style=\"flex-basis:33.33%\"><!-- wp:image {\"align\":\"center\",\"id\":9457,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/V99I04.png\" alt=\"\" class=\"wp-image-9457\"/><figcaption>InvesTech Research newsletter, \"The Lemming Principle,\" March 12, 1999</figcaption></figure></div>\n<!-- /wp:image --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column {\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:66.66%\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Index Funds: So Hot Right Now</strong></p><cite>The Motley Fool, 12/11/06</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:33.33%\"></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column {\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:33.33%\"></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:66.66%\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Index funds help you avoid risks of stock selection, market timing</strong></p><cite>Boston Globe, 2/27/07</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column {\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:66.66%\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Owning the S&amp;P 500 is cheap, easy and smart</strong></p><cite>USA Today, 7/20/07</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:33.33%\"></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:block {\"ref\":5343} /-->\n\n<!-- wp:paragraph -->\n<p>In these previous periods, much like today, most investors perceived index funds – particularly the S&amp;P 500 Index funds – to be more diversified, safer investments.  We’ll discuss why index funds may not be all they’re thought to be…</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>The Dark Side of Passive Investing – Live by the Index, Die by the Index</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>As noted, history shows that index investing reaches the highest level of popularity in aging bull markets or near market peaks. The reason for this is that any type of “risk management” during a bull market tends to reduce or moderate a fund manager’s return. Consequently, it is not uncommon for a fully invested S&amp;P 500 Index fund to outperform most actively managed mutual funds and money managers when measured <em><strong>solely </strong></em>over the duration of a bull market.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>There are multiple reasons index or passive investing becomes more popular in an aging bull market. First, it is more comfortable. One doesn’t have the burden of making decisions about which stocks to invest in, or when to sell a stock if it rises or falls precipitously. Indexing also tends to remove the regret from bad decisions, because any loss can be attributed entirely to the market. Lastly, investing in an index fund is the cheapest and easiest way to take advantage of the market’s stellar gains which <em><strong>seem </strong></em>likely to continue. Yet before jumping into the indexing mania today, consider these inherent risks in passive investing…</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li><strong>By definition, index funds also guarantee that you will suffer 100% of the next bear market’s decline.</strong> Regardless of which index you are matching, the index fund is required to stay fully invested regardless of market risk or volatility.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li><strong>Assets flowing into the most popular index funds are funneling investments into the largest and most overvalued stocks in the market, driving them higher. </strong>The S&amp;P 500 is a capitalization weighted index, so money invested into these popular index funds is not evenly distributed in all 500 stocks. Rather, the largest companies by market cap receive a disproportionate amount of the investment. As a result, investors must take the good with the bad and favor the largest companies within the basket of 500 stocks, regardless of valuation and financial strength (or lack thereof).</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li><strong>Market volatility increases when interest narrows to the index heavyweights. </strong>Only 50 stocks account for nearly 50% of S&amp;P 500 capitalization and one-half of an index fund’s portfolio. Additionally, the top 10 largest stocks comprise over 20% of the Index. As a result, downside risk in the next bear market could increase if selling pressure hits the largest stocks at the same time. The increased focus on index investing of late may very well increase both the size of, and speed at which the next bear market decline occurs.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:image {\"align\":\"right\",\"id\":9456,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"alignright size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/iShares-Core-SP-500-ETF.jpg\" alt=\"\" class=\"wp-image-9456\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li><strong>Intraday liquidity for ETFs can experience dramatic structural challenges in times of market distress. </strong>For example, during the market dislocation on August 24, 2015 the liquidity of most ETFs all but dried up just as the market opened. A confluence of problems –including circuit breakers, an obscure NYSE rule allowing market makers to delay posting prices, and a lack of futures data for large hedgers– all combined to take the bid out of the ETF space. Even large, well-established ETFs like the $116 billion iShares Core S&amp;P 500 ETF (IVV) saw unprecedented declines. As shown on the graph at right, IVV fell -26% on the open, far more than the -5.3% drop of the underlying S&amp;P 500. As a result of this liquidity hiccup, or “flash crash” as it was called at the time, investors with outstanding market orders and stop-loss orders sold their shares in IVV for far less than their worth.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Bottom Line</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The broad diversification and implied liquidity offered by index ETFs gives many investors a false sense of security. When passively investing in an index, devoid of risk management, investors are still subject to varying degrees of valuation and liquidity risk, and they bear the full brunt of cyclical market risk.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>Risk Management is Vital to any Strategy – <em>Ignore at your own peril!</em></h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Many actively managed mutual funds and money managers take some steps to mitigate portfolio risk – at times to the detriment of bull market performance. Although passive indexing may appear to be easier and is also perceived to reduce risk, it ends up having the opposite effect during major downturns as it guarantees an investor will experience <strong><em>all </em></strong>of the losses in the corresponding market index. Remember, long-term performance is dependent not only on how much you make in the bull markets, but also how much you give back in the bear markets. Investments that are weighted toward the largest, most overvalued stocks and sectors are exactly the opposite of what might be used in a strategy that manages risk.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Index investing proponents generally downplay stock market cycles, but bear market survivability is a very real issue for many investors, particularly those in or nearing retirement. The decision to hold the course on an investment strategy usually depends on the severity of bear market losses and how long one’s portfolio remains underwater… in other words, how much time it takes to recover those losses.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>To effectively demonstrate this concept, the <strong>Ulcer Index </strong>was developed in 1987 by Peter Martin to measure the depth and duration of drawdowns from earlier highs in one’s portfolio. It provides a graphic illustration of the level of stress and ulcers (hence the name) that can emerge from suffering deep, prolonged losses in one’s retirement savings.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Shown below are the comparative Ulcer Index graphs of the InvesTech Model Portfolio versus the Vanguard Total Stock Market Index (VTSMX), which is the largest and most popular fund on the market today.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9455,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/IT-Portfolio-vs-Vanguard-Ulcer-Index.jpg\" alt=\"\" class=\"wp-image-9455\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>The starts of the last two bear markets are noted in March 2000 and October 2007, as well as their subsequent market bottoms in October 2002 and March 2009. The green dashed lines illustrate the number of months required after the market bottom for one’s portfolio to recover the losses. Above all, the red shaded areas designate how long, and how deep one’s portfolio was underwater. These are the so-called “ulcer” zones when an investor must wait and wonder how long it will be before his portfolio is whole again.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>As you’ll note, InvesTech’s “risk management” strategy dramatically reduced the stress of the last two generational bear markets by limiting the time spent in the “ulcer” zones. While the InvesTech Model Portfolio didn’t outperform the Vanguard Total Stock Market Index Fund in the bull markets, our ability to manage and reduce risk provided a long-term return which more than doubled that of the Vanguard index fund. More importantly, InvesTech subscribers lost significantly less and recovered much more quickly during bear markets, avoiding the urge to panic out of the market at the wrong time.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>It is this combination of achieving safe returns and managing downside risk that matters most in the long-term performance of one’s portfolio… and in the survivability of bear markets.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:uagb/inline-notice {\"block_id\":\"d8f90386\",\"noticeContent\":\"\\u003cp\\u003ePast performance may not be indicative of future results. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended by InvesTech Research) will be profitable, equal any historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  \\u003ca href=\\u0022https://ns2020-investech.investech.com/terms-of-use/\\u0022 target=\\u0022_blank\\u0022 rel=\\u0022noreferrer noopener\\u0022\\u003eRead full Disclosures here\\u003c/a\\u003e\\u003ca href=\\u0022http://Past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk.  Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended by InvesTech Research) will be profitable, equal any historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.\\u0022 target=\\u0022_blank\\u0022 rel=\\u0022noreferrer noopener\\u0022\\u003e.\\u003c/a\\u003e\\u003c/p\\u003e\"} -->\n<div class=\"wp-block-uagb-inline-notice uagb-inline_notice__outer-wrap uagb-inline_notice__align-left uagb-block-d8f90386\"><h4 class=\"uagb-notice-title\">Important Disclosure Information</h4><div class=\"uagb-notice-text\"><p>Past performance may not be indicative of future results. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended by InvesTech Research) will be profitable, equal any historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  <a href=\"https://ns2020-investech.investech.com/terms-of-use/\" target=\"_blank\" rel=\"noreferrer noopener\">Read full Disclosures here</a><a href=\"http://Past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk.  Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended by InvesTech Research) will be profitable, equal any historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.\" target=\"_blank\" rel=\"noreferrer noopener\">.</a></p></div></div>\n<!-- /wp:uagb/inline-notice -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:heading {\"level\":4} -->\n<h4>Excerpt from <em>InvesTech Research</em> - June 16, 2017</h4>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Also available to read in <a href=\"https://ns2020-investech.investech.com/wp-content/uploads/2020/08/IndexingFever.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF format</a></p>\n<!-- /wp:paragraph -->','Passive Investing: Inevitable Black Eye','Tempted by high-flying ETFs in this aging bull market? Just remember… Excitement is highest as the roller coaster goes over the top! In today’s technologically advanced world, featuring self-driving cars, pilotless airplanes, and smart homes, a “hands-off” trend is also gaining popularity among the investing public.','inherit','closed','closed','','2468-revision-v1','','','2021-07-20 22:49:31','2021-07-20 22:49:31','',2468,'https://ns2020-investech.investech.com/?p=9463',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9465,2,'2021-07-20 22:53:30','2021-07-20 22:53:30','<!-- wp:quote -->\n<blockquote class=\"wp-block-quote\"><p><strong> The ABCs of MLPs…<br>What you don’t know can hurt you.</strong></p></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:paragraph -->\n<p>In this era of ultra-low interest rates, investors are inevitably drawn to investments with attractive yields, and Master Limited Partnerships (MLPs) are among the most popular income-generating investments on the market today. These appear to be safe and secure places to invest as MLPs derive their income from revenue generating properties and infrastructure, but there’s more to the story.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>What are Master Limited Partnerships (MLPs)?</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>As the name states, MLPs are limited partnerships which trade on major exchanges like common stock. They consist of a general partner (a sponsoring company in the same industry, which retains control of the business) and limited partners. When investors buy shares or units of the MLP, they become a limited partner in the business.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>As partnerships, MLPs are eligible for special tax treatment and avoid “double taxation.” With common stock, dividends are essentially taxed twice – once at the corporate level before dividends are paid and again at the shareholder level, after the dividend is received. Partnerships –including MLPs– are treated as “pass-through” entities where the income and deductions are passed directly to the partners (investors) who pay the taxes. Thus, MLPs are taxed only once at the investor level.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"right\",\"id\":5300,\"sizeSlug\":\"medium\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"alignright size-medium\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/01/AlerianYield-300x166.png\" alt=\"Alerian MLP Index yield\" class=\"wp-image-5300\"/><figcaption>Yield on Alerian MLP Index</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>Due to this favorable tax treatment, the level of distribution or yield for MLPs is generally high and can be very attractive to potential investors. One of the primary benchmarks used to track these publicly traded partnerships is the Alerian MLP Index, which includes 50 of the most prominent MLPs. The yield for this Index over the past 20 years is shown in the graph at right. Note that the yield has generally been in the 6-8% range, and has occasionally jumped to over 10%.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>With yields like this, it’s no surprise that many investors consider MLPs to be a great source of potential income. But they aren’t as safe as commonly perceived, and there are important facts to consider before making an investment decision…</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Fact #1: Sector diversification options are limited.</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Today, the majority of MLPs are in the energy sector and most are engaged in energy-related transportation, processing, and storage. This makes sector diversification problematic. Current tax regulations require that a publicly traded partnership must receive 90% of its income from specified sources, most of which pertain to natural resources. Thus, there are only a few MLP options outside of energy, and those are mostly in real estate and finance.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Fact #2: Yields can be high, but distributions are not guaranteed.</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Most MLPs manage to maintain distributions even in a weak economy. However, they need to have profits to make payouts. In recent downturns, it’s become apparent that distributions can decline or even disappear altogether. Several 2007 members of the Alerian MLP Index were forced to cut distributions significantly in the last recession (and it’s interesting to note that they have since been dropped from the Index).</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Atlas Pipeline Partners LP (symbol: APL) is a prime example of the risk in MLP investing. Over the course of the last recession, the price of APL shares dropped more than 90% and distributions ceased. No distributions were made from May 2009 to November 2010.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Fact #3: MLPs mean more work at tax time.</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>When you invest in an MLP, you become a limited partner, so the tax picture is more complicated than when you simply own common stock. With stocks, investors pay taxes on dividends received. With MLPs, much of the tax on distribution income is deferred until you sell your shares. Briefly, this is how taxes work with an MLP…</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>At year-end you receive a “K1” report from the partnership showing your portion of partnership income minus deductions for depreciation, depletion, etc. Due to these offsetting deductions, the net taxable income for the year is usually much less than the distributions paid out. The difference between the distribution and taxable income is treated as “return of capital” and reduces your cost basis. When you sell the shares, you will be required to pay income taxes on the “return of capital” portion, along with any capital gains above your initial investment. Bottom line, MLP investing requires extra work and forms at tax time, and it can lead to delays in filing as you wait for K1s to be issued.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Fact #4: MLPs are generally not suitable investments for IRAs or pension plans.</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>There are no restrictions on buying MLPs in qualified retirement plans, but they may not be a good investment option. One benefit of owning an MLP is that most taxes are deferred until sale, and that benefit is wasted in a tax deferred IRA. Also, although your retirement plan is tax exempt,<strong> it could end up owing taxes on MLP income. </strong>The reason is that any tax-exempt entity (like an IRA) that earns income from an outside business is subject to the “Unrelated Business Income Tax” (UBIT) after the first $1,000 of net income. As a partner in an MLP, your retirement plan could be considered to earn this sort of income.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Fact #5: MLPs carry unknown risks.</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>It’s important to remember that these investments are not like bonds or preferred stocks which have a set par value. The price of MLP shares fluctuates like common stock. MLPs tend to be especially vulnerable to rising interest rates as they face increased competition from other income investments such as bonds or CDs. Higher interest rates also increase the cost of capital used for maintenance or expansion of MLP assets. In addition, economic swings can have a negative impact since most MLPs derive income from oil and gas properties, and utilization of these assets typically declines in a recession.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"right\",\"id\":5301,\"sizeSlug\":\"medium\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"alignright size-medium\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/01/AlerianMLP-300x202.png\" alt=\"Alerian price index took three years to surpass its peak in the bear market\" class=\"wp-image-5301\"/><figcaption>Alerian MLP Price Index</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>This variability in MLP performance is evident in the Alerian MLP Price Index shown at right. Although this Index has generally moved higher over the past 20 years, it hit a major peak in 2007 and again in 2014. Over the course of the last bear market, this MLP Index dropped more than 55% and it took over three years to surpass the 2007 peak.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>The trajectory in this Index is also particularly worrisome. As investors have flocked to these popular investments, this Index has soared and valuations have climbed. Even with the sell-off in energy stocks, the average P/E ratio of the Alerian Index constituents is now 30x compared to an average P/E of 20.7x for the S&amp;P 500.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3><strong>Also, although MLPs currently enjoy tax favored status, be aware that tax rules can change at the stroke of a legislative pen.</strong> </h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>This has happened before. In the early 1980s, the first MLPs were a far more diverse group than they are today. Under the tax laws at the time, firms in a variety of energy and consumer industries were able to take advantage of this tax favored status including restaurants, hotels and cable TV. Even the Boston Celtics traded as an MLP at one time. In 1987 the tax code tightened, and under the new rules many of these partnerships no longer qualified for the tax advantages.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Also, in a more recent example, Canada’s 2006 Tax Fairness Plan implemented a new tax eventually amounting to more than 30% on most Canadian Income Trusts, which are similar tax-advantaged entities. The intention, of course, was to capture more tax revenue and make this form of business less attractive to existing corporations. Keep in mind that the U.S. government is seeking ways to generate more tax revenue right now and MLPs are currently exempt from paying corporate taxes.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>Strategy</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Though MLPs offer an attractive yield, they do carry risks and can lose value. It’s important to recognize these are <em><strong>not </strong></em>simply safe, dividend paying alternatives to stocks or bonds. The risks in these MLPs are particularly acute today with continued demand for high-yield instruments, volatility in oil prices, and the likelihood of rising interest rates in the future.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>At this point in time, we do not view MLPs as a “safety-first” alternative, and advise following these guidelines if investing in MLPs today:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li>Limit allocation to no more than 10% of the portfolio.</li><li>Diversify among MLPs so you are not invested in just a single partnership.</li><li>Generally avoid buying MLPs in IRAs or other tax-exempt accounts.</li><li>Do your research, just as you would in selecting stocks. Study the partnership before investing and look for strong financial position (including stability of the general partner) and any hidden liabilities, as well as growth potential.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:heading {\"level\":4} -->\n<h4>InvesTech Research Special Report published March 11, 2011 - updated May 27, 2015.  </h4>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Also available in <a href=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/06/MLPs.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF format</a></p>\n<!-- /wp:paragraph -->','Investing in MLPs: The Rest of the Story','In this era of ultra-low interest rates, investors are inevitably drawn to investments with attractive yields, and Master Limited Partnerships (MLPs) are among the most popular income-generating investments on the market today. Learn the ABCs of MLPs… what you don’t know can hurt you. ','inherit','closed','closed','','2474-revision-v1','','','2021-07-20 22:53:30','2021-07-20 22:53:30','',2474,'https://ns2020-investech.investech.com/?p=9465',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9466,2,'2021-07-20 22:53:41','2021-07-20 22:53:41','','Alerian-MLP','','inherit','closed','closed','','alerian-mlp','','','2021-07-20 22:53:41','2021-07-20 22:53:41','',9376,'https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Alerian-MLP.png',0,'attachment','image/png',0);
INSERT INTO `wp_posts` VALUES (9467,2,'2021-07-20 22:53:43','2021-07-20 22:53:43','','Alerian-Yield','','inherit','closed','closed','','alerian-yield','','','2021-07-20 22:53:43','2021-07-20 22:53:43','',9376,'https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Alerian-Yield.png',0,'attachment','image/png',0);
INSERT INTO `wp_posts` VALUES (9468,2,'2021-07-20 22:54:53','2021-07-20 22:54:53','<!-- wp:quote -->\n<blockquote class=\"wp-block-quote\"><p><strong> The ABCs of MLPs…<br>What you don’t know can hurt you.</strong></p></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:paragraph -->\n<p>In this era of ultra-low interest rates, investors are inevitably drawn to investments with attractive yields, and Master Limited Partnerships (MLPs) are among the most popular income-generating investments on the market today. These appear to be safe and secure places to invest as MLPs derive their income from revenue generating properties and infrastructure, but there’s more to the story.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>What are Master Limited Partnerships (MLPs)?</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>As the name states, MLPs are limited partnerships which trade on major exchanges like common stock. They consist of a general partner (a sponsoring company in the same industry, which retains control of the business) and limited partners. When investors buy shares or units of the MLP, they become a limited partner in the business.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>As partnerships, MLPs are eligible for special tax treatment and avoid “double taxation.” With common stock, dividends are essentially taxed twice – once at the corporate level before dividends are paid and again at the shareholder level, after the dividend is received. Partnerships –including MLPs– are treated as “pass-through” entities where the income and deductions are passed directly to the partners (investors) who pay the taxes. Thus, MLPs are taxed only once at the investor level.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"right\",\"id\":9467,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"alignright size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Alerian-Yield.png\" alt=\"\" class=\"wp-image-9467\"/><figcaption>Yield on Alerian MLP Index</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>Due to this favorable tax treatment, the level of distribution or yield for MLPs is generally high and can be very attractive to potential investors. One of the primary benchmarks used to track these publicly traded partnerships is the Alerian MLP Index, which includes 50 of the most prominent MLPs. The yield for this Index over the past 20 years is shown in the graph at right. Note that the yield has generally been in the 6-8% range, and has occasionally jumped to over 10%.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>With yields like this, it’s no surprise that many investors consider MLPs to be a great source of potential income. But they aren’t as safe as commonly perceived, and there are important facts to consider before making an investment decision…</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Fact #1: Sector diversification options are limited.</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Today, the majority of MLPs are in the energy sector and most are engaged in energy-related transportation, processing, and storage. This makes sector diversification problematic. Current tax regulations require that a publicly traded partnership must receive 90% of its income from specified sources, most of which pertain to natural resources. Thus, there are only a few MLP options outside of energy, and those are mostly in real estate and finance.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Fact #2: Yields can be high, but distributions are not guaranteed.</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Most MLPs manage to maintain distributions even in a weak economy. However, they need to have profits to make payouts. In recent downturns, it’s become apparent that distributions can decline or even disappear altogether. Several 2007 members of the Alerian MLP Index were forced to cut distributions significantly in the last recession (and it’s interesting to note that they have since been dropped from the Index).</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Atlas Pipeline Partners LP (symbol: APL) is a prime example of the risk in MLP investing. Over the course of the last recession, the price of APL shares dropped more than 90% and distributions ceased. No distributions were made from May 2009 to November 2010.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Fact #3: MLPs mean more work at tax time.</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>When you invest in an MLP, you become a limited partner, so the tax picture is more complicated than when you simply own common stock. With stocks, investors pay taxes on dividends received. With MLPs, much of the tax on distribution income is deferred until you sell your shares. Briefly, this is how taxes work with an MLP…</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>At year-end you receive a “K1” report from the partnership showing your portion of partnership income minus deductions for depreciation, depletion, etc. Due to these offsetting deductions, the net taxable income for the year is usually much less than the distributions paid out. The difference between the distribution and taxable income is treated as “return of capital” and reduces your cost basis. When you sell the shares, you will be required to pay income taxes on the “return of capital” portion, along with any capital gains above your initial investment. Bottom line, MLP investing requires extra work and forms at tax time, and it can lead to delays in filing as you wait for K1s to be issued.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Fact #4: MLPs are generally not suitable investments for IRAs or pension plans.</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>There are no restrictions on buying MLPs in qualified retirement plans, but they may not be a good investment option. One benefit of owning an MLP is that most taxes are deferred until sale, and that benefit is wasted in a tax deferred IRA. Also, although your retirement plan is tax exempt,<strong> it could end up owing taxes on MLP income. </strong>The reason is that any tax-exempt entity (like an IRA) that earns income from an outside business is subject to the “Unrelated Business Income Tax” (UBIT) after the first $1,000 of net income. As a partner in an MLP, your retirement plan could be considered to earn this sort of income.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Fact #5: MLPs carry unknown risks.</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>It’s important to remember that these investments are not like bonds or preferred stocks which have a set par value. The price of MLP shares fluctuates like common stock. MLPs tend to be especially vulnerable to rising interest rates as they face increased competition from other income investments such as bonds or CDs. Higher interest rates also increase the cost of capital used for maintenance or expansion of MLP assets. In addition, economic swings can have a negative impact since most MLPs derive income from oil and gas properties, and utilization of these assets typically declines in a recession.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"right\",\"id\":9466,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"alignright size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Alerian-MLP.png\" alt=\"\" class=\"wp-image-9466\"/><figcaption>Alerian MLP Price Index</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>This variability in MLP performance is evident in the Alerian MLP Price Index shown at right. Although this Index has generally moved higher over the past 20 years, it hit a major peak in 2007 and again in 2014. Over the course of the last bear market, this MLP Index dropped more than 55% and it took over three years to surpass the 2007 peak.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>The trajectory in this Index is also particularly worrisome. As investors have flocked to these popular investments, this Index has soared and valuations have climbed. Even with the sell-off in energy stocks, the average P/E ratio of the Alerian Index constituents is now 30x compared to an average P/E of 20.7x for the S&amp;P 500.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3><strong>Also, although MLPs currently enjoy tax favored status, be aware that tax rules can change at the stroke of a legislative pen.</strong> </h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>This has happened before. In the early 1980s, the first MLPs were a far more diverse group than they are today. Under the tax laws at the time, firms in a variety of energy and consumer industries were able to take advantage of this tax favored status including restaurants, hotels and cable TV. Even the Boston Celtics traded as an MLP at one time. In 1987 the tax code tightened, and under the new rules many of these partnerships no longer qualified for the tax advantages.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Also, in a more recent example, Canada’s 2006 Tax Fairness Plan implemented a new tax eventually amounting to more than 30% on most Canadian Income Trusts, which are similar tax-advantaged entities. The intention, of course, was to capture more tax revenue and make this form of business less attractive to existing corporations. Keep in mind that the U.S. government is seeking ways to generate more tax revenue right now and MLPs are currently exempt from paying corporate taxes.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>Strategy</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Though MLPs offer an attractive yield, they do carry risks and can lose value. It’s important to recognize these are <em><strong>not </strong></em>simply safe, dividend paying alternatives to stocks or bonds. The risks in these MLPs are particularly acute today with continued demand for high-yield instruments, volatility in oil prices, and the likelihood of rising interest rates in the future.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>At this point in time, we do not view MLPs as a “safety-first” alternative, and advise following these guidelines if investing in MLPs today:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li>Limit allocation to no more than 10% of the portfolio.</li><li>Diversify among MLPs so you are not invested in just a single partnership.</li><li>Generally avoid buying MLPs in IRAs or other tax-exempt accounts.</li><li>Do your research, just as you would in selecting stocks. Study the partnership before investing and look for strong financial position (including stability of the general partner) and any hidden liabilities, as well as growth potential.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:heading {\"level\":4} -->\n<h4>InvesTech Research Special Report published March 11, 2011 - updated May 27, 2015.  </h4>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Also available in <a href=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/06/MLPs.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF format</a></p>\n<!-- /wp:paragraph -->','Investing in MLPs: The Rest of the Story','In this era of ultra-low interest rates, investors are inevitably drawn to investments with attractive yields, and Master Limited Partnerships (MLPs) are among the most popular income-generating investments on the market today. Learn the ABCs of MLPs… what you don’t know can hurt you. ','inherit','closed','closed','','2474-revision-v1','','','2021-07-20 22:54:53','2021-07-20 22:54:53','',2474,'https://ns2020-investech.investech.com/?p=9468',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9469,3,'2021-07-20 15:26:11','2021-07-20 15:26:11','<!-- wp:paragraph -->\n<p>The National Bureau of Economic Research (NBER) has officially announced that the pandemic-induced recession has ended.&nbsp; According to the NBER, the recession which began in February 2020 officially ended just two months later in April 2020, making it the shortest U.S. recession on record.&nbsp; This announcement is in-line with leading economic data –such as the Leading Economic Index from the Conference Board– which also bottomed last April.&nbsp;</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9485,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/07/lei_recessions3.jpg\" alt=\"\" class=\"wp-image-9485\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p></p>\n<!-- /wp:paragraph -->\n\n<!-- wp:spacer {\"height\":50} -->\n<div style=\"height:50px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:separator {\"className\":\"is-style-wide\"} -->\n<hr class=\"wp-block-separator is-style-wide\"/>\n<!-- /wp:separator -->\n\n<!-- wp:paragraph -->\n<p></p>\n<!-- /wp:paragraph -->','COVID-19 recession declared shortest on record','The National Bureau of Economic Research (NBER) has officially announced that the pandemic-induced recession has ended.','publish','closed','closed','','covid-recession-declared-shortest-on-record','','','2021-10-20 09:34:23','2021-10-20 15:34:23','',0,'https://ns2020-investech.investech.com/?post_type=investech-library&#038;p=9469',0,'investech-library','',0);
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INSERT INTO `wp_posts` VALUES (9471,3,'2021-07-21 15:26:11','2021-07-21 15:26:11','<!-- wp:paragraph -->\n<p>The National Bureau of Economic Research (NBER) has officially announced that the pandemic-induced recession has ended.  According to the NBER, the recession which began in February 2020 officially ended just two months later in April 2020, making it the shortest U.S. recession on record.  This announcement is in-line with leading economic data –such as the Leading Economic Index from the Conference Board– which also bottomed last April. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9470,\"width\":523,\"height\":296,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large is-resized\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/07/lei_recessions.jpg\" alt=\"\" class=\"wp-image-9470\" width=\"523\" height=\"296\"/></figure></div>\n<!-- /wp:image -->','COVID recession declared shortest on record','','inherit','closed','closed','','9469-revision-v1','','','2021-07-21 15:26:11','2021-07-21 15:26:11','',9469,'https://ns2020-investech.investech.com/?p=9471',0,'revision','',0);
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INSERT INTO `wp_posts` VALUES (9475,3,'2021-07-21 15:29:57','2021-07-21 15:29:57','<!-- wp:paragraph -->\n<p>The National Bureau of Economic Research (NBER) has officially announced that the pandemic-induced recession has ended.  According to the NBER, the recession which began in February 2020 officially ended just two months later in April 2020, making it the shortest U.S. recession on record.  This announcement is in-line with leading economic data –such as the Leading Economic Index from the Conference Board– which also bottomed last April. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9470,\"width\":523,\"height\":296,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large is-resized\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/07/lei_recessions.jpg\" alt=\"\" class=\"wp-image-9470\" width=\"523\" height=\"296\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>Also available to read in PDF Format</p>\n<!-- /wp:paragraph -->','COVID recession declared shortest on record','','inherit','closed','closed','','9469-revision-v1','','','2021-07-21 15:29:57','2021-07-21 15:29:57','',9469,'https://ns2020-investech.investech.com/?p=9475',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9476,3,'2021-07-21 15:30:00','2021-07-21 15:30:00','<!-- wp:paragraph -->\n<p>The National Bureau of Economic Research (NBER) has officially announced that the pandemic-induced recession has ended.  According to the NBER, the recession which began in February 2020 officially ended just two months later in April 2020, making it the shortest U.S. recession on record.  This announcement is in-line with leading economic data –such as the Leading Economic Index from the Conference Board– which also bottomed last April. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9470,\"width\":523,\"height\":296,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large is-resized\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/07/lei_recessions.jpg\" alt=\"\" class=\"wp-image-9470\" width=\"523\" height=\"296\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>Also available to read in PDF Format</p>\n<!-- /wp:paragraph -->','COVID recession declared shortest on record','','inherit','closed','closed','','9469-revision-v1','','','2021-07-21 15:30:00','2021-07-21 15:30:00','',9469,'https://ns2020-investech.investech.com/?p=9476',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9477,3,'2021-07-21 15:30:41','2021-07-21 15:30:41','<!-- wp:paragraph -->\n<p>The National Bureau of Economic Research (NBER) has officially announced that the pandemic-induced recession has ended.  According to the NBER, the recession which began in February 2020 officially ended just two months later in April 2020, making it the shortest U.S. recession on record.  This announcement is in-line with leading economic data –such as the Leading Economic Index from the Conference Board– which also bottomed last April. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9470,\"width\":523,\"height\":296,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large is-resized\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/07/lei_recessions.jpg\" alt=\"\" class=\"wp-image-9470\" width=\"523\" height=\"296\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>Also available to read in PDF Format</p>\n<!-- /wp:paragraph -->','COVID recession declared shortest on record','The National Bureau of Economic Research (NBER) has officially announced that the pandemic-induced recession has ended.','inherit','closed','closed','','9469-revision-v1','','','2021-07-21 15:30:41','2021-07-21 15:30:41','',9469,'https://ns2020-investech.investech.com/?p=9477',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9478,3,'2021-07-21 15:30:43','2021-07-21 15:30:43','<!-- wp:paragraph -->\n<p>The National Bureau of Economic Research (NBER) has officially announced that the pandemic-induced recession has ended.  According to the NBER, the recession which began in February 2020 officially ended just two months later in April 2020, making it the shortest U.S. recession on record.  This announcement is in-line with leading economic data –such as the Leading Economic Index from the Conference Board– which also bottomed last April. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9470,\"width\":523,\"height\":296,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large is-resized\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/07/lei_recessions.jpg\" alt=\"\" class=\"wp-image-9470\" width=\"523\" height=\"296\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>Also available to read in PDF Format</p>\n<!-- /wp:paragraph -->','COVID recession declared shortest on record','The National Bureau of Economic Research (NBER) has officially announced that the pandemic-induced recession has ended.','inherit','closed','closed','','9469-revision-v1','','','2021-07-21 15:30:43','2021-07-21 15:30:43','',9469,'https://ns2020-investech.investech.com/?p=9478',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9479,3,'2021-07-21 15:31:42','2021-07-21 15:31:42','<!-- wp:paragraph -->\n<p>The National Bureau of Economic Research (NBER) has officially announced that the pandemic-induced recession has ended.  According to the NBER, the recession which began in February 2020 officially ended just two months later in April 2020, making it the shortest U.S. recession on record.  This announcement is in-line with leading economic data –such as the Leading Economic Index from the Conference Board– which also bottomed last April. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9470,\"width\":523,\"height\":296,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large is-resized\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/07/lei_recessions.jpg\" alt=\"\" class=\"wp-image-9470\" width=\"523\" height=\"296\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>Also available to read in <a href=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/20210721-Recession-Update.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF Format</a>.</p>\n<!-- /wp:paragraph -->','COVID recession declared shortest on record','The National Bureau of Economic Research (NBER) has officially announced that the pandemic-induced recession has ended.','inherit','closed','closed','','9469-revision-v1','','','2021-07-21 15:31:42','2021-07-21 15:31:42','',9469,'https://ns2020-investech.investech.com/?p=9479',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9480,3,'2021-07-21 15:31:45','2021-07-21 15:31:45','<!-- wp:paragraph -->\n<p>The National Bureau of Economic Research (NBER) has officially announced that the pandemic-induced recession has ended.  According to the NBER, the recession which began in February 2020 officially ended just two months later in April 2020, making it the shortest U.S. recession on record.  This announcement is in-line with leading economic data –such as the Leading Economic Index from the Conference Board– which also bottomed last April. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9470,\"width\":523,\"height\":296,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large is-resized\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/07/lei_recessions.jpg\" alt=\"\" class=\"wp-image-9470\" width=\"523\" height=\"296\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>Also available to read in <a href=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/20210721-Recession-Update.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF Format</a>.</p>\n<!-- /wp:paragraph -->','COVID recession declared shortest on record','The National Bureau of Economic Research (NBER) has officially announced that the pandemic-induced recession has ended.','inherit','closed','closed','','9469-revision-v1','','','2021-07-21 15:31:45','2021-07-21 15:31:45','',9469,'https://ns2020-investech.investech.com/?p=9480',0,'revision','',0);
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INSERT INTO `wp_posts` VALUES (9483,3,'2021-07-21 15:33:59','2021-07-21 15:33:59','<!-- wp:paragraph -->\n<p>The National Bureau of Economic Research (NBER) has officially announced that the pandemic-induced recession has ended.  According to the NBER, the recession which began in February 2020 officially ended just two months later in April 2020, making it the shortest U.S. recession on record.  This announcement is in-line with leading economic data –such as the Leading Economic Index from the Conference Board– which also bottomed last April. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9481,\"width\":697,\"height\":394,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large is-resized\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/07/lei_recessions1.jpg\" alt=\"\" class=\"wp-image-9481\" width=\"697\" height=\"394\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>Also available to read in <a href=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/20210721-Recession-Update.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF Format</a>.</p>\n<!-- /wp:paragraph -->','COVID recession declared shortest on record','The National Bureau of Economic Research (NBER) has officially announced that the pandemic-induced recession has ended.','inherit','closed','closed','','9469-revision-v1','','','2021-07-21 15:33:59','2021-07-21 15:33:59','',9469,'https://ns2020-investech.investech.com/?p=9483',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9484,3,'2021-07-21 15:34:01','2021-07-21 15:34:01','<!-- wp:paragraph -->\n<p>The National Bureau of Economic Research (NBER) has officially announced that the pandemic-induced recession has ended.  According to the NBER, the recession which began in February 2020 officially ended just two months later in April 2020, making it the shortest U.S. recession on record.  This announcement is in-line with leading economic data –such as the Leading Economic Index from the Conference Board– which also bottomed last April. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9481,\"width\":697,\"height\":394,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large is-resized\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/07/lei_recessions1.jpg\" alt=\"\" class=\"wp-image-9481\" width=\"697\" height=\"394\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>Also available to read in <a href=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/20210721-Recession-Update.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF Format</a>.</p>\n<!-- /wp:paragraph -->','COVID recession declared shortest on record','The National Bureau of Economic Research (NBER) has officially announced that the pandemic-induced recession has ended.','inherit','closed','closed','','9469-revision-v1','','','2021-07-21 15:34:01','2021-07-21 15:34:01','',9469,'https://ns2020-investech.investech.com/?p=9484',0,'revision','',0);
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INSERT INTO `wp_posts` VALUES (9488,3,'2021-07-21 15:45:12','2021-07-21 15:45:12','<!-- wp:paragraph -->\n<p>The National Bureau of Economic Research (NBER) has officially announced that the pandemic-induced recession has ended.  According to the NBER, the recession which began in February 2020 officially ended just two months later in April 2020, making it the shortest U.S. recession on record.  This announcement is in-line with leading economic data –such as the Leading Economic Index from the Conference Board– which also bottomed last April. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9485,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/07/lei_recessions3.jpg\" alt=\"\" class=\"wp-image-9485\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>Also available to read in <a href=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/20210721-Recession_Update.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF Format</a>.</p>\n<!-- /wp:paragraph -->','COVID recession declared shortest on record','The National Bureau of Economic Research (NBER) has officially announced that the pandemic-induced recession has ended.','inherit','closed','closed','','9469-revision-v1','','','2021-07-21 15:45:12','2021-07-21 15:45:12','',9469,'https://ns2020-investech.investech.com/?p=9488',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9489,3,'2021-07-21 15:45:15','2021-07-21 15:45:15','<!-- wp:paragraph -->\n<p>The National Bureau of Economic Research (NBER) has officially announced that the pandemic-induced recession has ended.  According to the NBER, the recession which began in February 2020 officially ended just two months later in April 2020, making it the shortest U.S. recession on record.  This announcement is in-line with leading economic data –such as the Leading Economic Index from the Conference Board– which also bottomed last April. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9485,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/07/lei_recessions3.jpg\" alt=\"\" class=\"wp-image-9485\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>Also available to read in <a href=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/20210721-Recession_Update.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF Format</a>.</p>\n<!-- /wp:paragraph -->','COVID recession declared shortest on record','The National Bureau of Economic Research (NBER) has officially announced that the pandemic-induced recession has ended.','inherit','closed','closed','','9469-revision-v1','','','2021-07-21 15:45:15','2021-07-21 15:45:15','',9469,'https://ns2020-investech.investech.com/?p=9489',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9490,3,'2021-07-21 16:09:32','2021-07-21 16:09:32','<!-- wp:paragraph -->\n<p>The National Bureau of Economic Research (NBER) has officially announced that the pandemic-induced recession has ended.  According to the NBER, the recession which began in February 2020 officially ended just two months later in April 2020, making it the shortest U.S. recession on record.  This announcement is in-line with leading economic data –such as the Leading Economic Index from the Conference Board– which also bottomed last April. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9485,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/07/lei_recessions3.jpg\" alt=\"\" class=\"wp-image-9485\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>Also available to read in <a href=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/20210721-Recession_Update.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF Format</a>.</p>\n<!-- /wp:paragraph -->','COVID-19 recession declared shortest on record','The National Bureau of Economic Research (NBER) has officially announced that the pandemic-induced recession has ended.','inherit','closed','closed','','9469-revision-v1','','','2021-07-21 16:09:32','2021-07-21 16:09:32','',9469,'https://ns2020-investech.investech.com/?p=9490',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9491,3,'2021-07-21 17:08:23','2021-07-21 17:08:23','<!-- wp:paragraph -->\n<p>The National Bureau of Economic Research (NBER) has officially announced that the pandemic-induced recession has ended.&nbsp; According to the NBER, the recession which began in February 2020 officially ended just two months later in April 2020, making it the shortest U.S. recession on record.&nbsp; This announcement is in-line with leading economic data –such as the Leading Economic Index from the Conference Board– which also bottomed last April.&nbsp;</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9485,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/07/lei_recessions3.jpg\" alt=\"\" class=\"wp-image-9485\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>Also available to read in <a href=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/20210721-Recession_Update.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF Format</a>.</p>\n<!-- /wp:paragraph -->','COVID-19 recession declared shortest on record','The National Bureau of Economic Research (NBER) has officially announced that the pandemic-induced recession has ended.','inherit','closed','closed','','9469-revision-v1','','','2021-07-21 17:08:23','2021-07-21 17:08:23','',9469,'https://ns2020-investech.investech.com/?p=9491',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9492,3,'2021-07-21 17:08:25','2021-07-21 17:08:25','<!-- wp:paragraph -->\n<p>The National Bureau of Economic Research (NBER) has officially announced that the pandemic-induced recession has ended.&nbsp; According to the NBER, the recession which began in February 2020 officially ended just two months later in April 2020, making it the shortest U.S. recession on record.&nbsp; This announcement is in-line with leading economic data –such as the Leading Economic Index from the Conference Board– which also bottomed last April.&nbsp;</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9485,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/07/lei_recessions3.jpg\" alt=\"\" class=\"wp-image-9485\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>Also available to read in <a href=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/20210721-Recession_Update.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF Format</a>.</p>\n<!-- /wp:paragraph -->','COVID-19 recession declared shortest on record','The National Bureau of Economic Research (NBER) has officially announced that the pandemic-induced recession has ended.','inherit','closed','closed','','9469-revision-v1','','','2021-07-21 17:08:25','2021-07-21 17:08:25','',9469,'https://ns2020-investech.investech.com/?p=9492',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9493,3,'2021-07-21 17:08:55','2021-07-21 17:08:55','<!-- wp:paragraph -->\n<p>The National Bureau of Economic Research (NBER) has officially announced that the pandemic-induced recession has ended.&nbsp; According to the NBER, the recession which began in February 2020 officially ended just two months later in April 2020, making it the shortest U.S. recession on record.&nbsp; This announcement is in-line with leading economic data –such as the Leading Economic Index from the Conference Board– which also bottomed last April.&nbsp;</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9485,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/07/lei_recessions3.jpg\" alt=\"\" class=\"wp-image-9485\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>Also available to read in <a href=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/20210721-Recession_Update.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF Format</a>.</p>\n<!-- /wp:paragraph -->','COVID-19 recession declared shortest on record','The National Bureau of Economic Research (NBER) has officially announced that the pandemic-induced recession has ended.','inherit','closed','closed','','9469-revision-v1','','','2021-07-21 17:08:55','2021-07-21 17:08:55','',9469,'https://ns2020-investech.investech.com/?p=9493',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9494,3,'2021-07-21 17:11:38','2021-07-21 17:11:38','<!-- wp:paragraph -->\n<p>The ISM Services Index fell to a reading of 60.1% in June, still firmly in expansion territory and just 3.9% below its record high from the month before.&nbsp; While the service sector remains strong, inflation continues to be a primary concern.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>The “Prices Paid” Index for the service sector remains near the highest level in its history, which is proving to be a challenge for many businesses.&nbsp; The Institute for Supply Management highlighted the issue in this month’s report by stating, “<em>Challenges with materials shortages, inflation, logistics and employment resources continue to be an impediment to business conditions.”</em>&nbsp;</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9246,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/ISM-Services-June-2021.jpg\" alt=\"\" class=\"wp-image-9246\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:paragraph -->\n<p>Also available to read in <a href=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/ISM-Services-June-2021-2.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF format</a></p>\n<!-- /wp:paragraph -->','Services remains on solid ground','The ISM Services Index fell to a reading of 60.1% in June, still firmly in expansion territory and just 3.9% below its record high from the month before.  ','inherit','closed','closed','','9213-revision-v1','','','2021-07-21 17:11:38','2021-07-21 17:11:38','',9213,'https://ns2020-investech.investech.com/?p=9494',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9495,3,'2021-07-21 18:13:41','2021-07-21 18:13:41','<!-- wp:paragraph -->\n<p>We believe InvesTech can offer you a level of investment information and guidance you can\'t find elsewhere. Take a few moments to read the following newsletter.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:buttons -->\n<div class=\"wp-block-buttons\"><!-- wp:button -->\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link\" href=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/04/free-sample.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">Download Now</a></div>\n<!-- /wp:button --></div>\n<!-- /wp:buttons -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Subscribe and receive the <em>InvesTech Research</em> newsletter, real-time updates to our proprietary indicators, and immediate access to subscriber\'s only content.  </h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>We provide a no-risk money-back guarantee.  You may cancel at any time and receive a 100% refund on the unused portion of your subscription.  </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:buttons -->\n<div class=\"wp-block-buttons\"><!-- wp:button {\"className\":\"is-style-high-impact\"} -->\n<div class=\"wp-block-button is-style-high-impact\"><a class=\"wp-block-button__link\">Subscribe</a></div>\n<!-- /wp:button --></div>\n<!-- /wp:buttons -->','Download Free Sample','','inherit','closed','closed','','9303-revision-v1','','','2021-07-21 18:13:41','2021-07-21 18:13:41','',9303,'https://ns2020-investech.investech.com/?p=9495',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9497,3,'2021-07-21 18:19:13','2021-07-21 18:19:13','<!-- wp:paragraph -->\n<p>Thank you for requesting We believe InvesTech can offer you a level of investment information and guidance you can\'t find elsewhere. Take a few moments to read the following newsletter.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:buttons -->\n<div class=\"wp-block-buttons\"><!-- wp:button -->\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link\" href=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/04/free-sample.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">Download Now</a></div>\n<!-- /wp:button --></div>\n<!-- /wp:buttons -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Subscribe and receive the monthly <em>InvesTech Research</em> newsletter, weekly Market Insights, real-time updates to our proprietary indicators, and immediate access to subscriber\'s only content.  </h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>We provide a no-risk money-back guarantee.  You may cancel at any time and receive a 100% refund on the unused portion of your subscription.  </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:buttons -->\n<div class=\"wp-block-buttons\"><!-- wp:button {\"className\":\"is-style-high-impact\"} -->\n<div class=\"wp-block-button is-style-high-impact\"><a class=\"wp-block-button__link\">Subscribe</a></div>\n<!-- /wp:button --></div>\n<!-- /wp:buttons -->','Download Free Sample','','inherit','closed','closed','','9303-revision-v1','','','2021-07-21 18:19:13','2021-07-21 18:19:13','',9303,'https://ns2020-investech.investech.com/?p=9497',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9498,3,'2021-07-21 20:05:30','2021-07-22 02:05:30','<!-- wp:paragraph -->\n<p>Homebuilders became slightly less optimistic this month according to the National Association of Home Builders (NAHB), yet their confidence remains higher than any point prior to the COVID-19 pandemic (top graph below).&nbsp; Likewise, the Traffic of Prospective Buyers component fell but remains at a historically high level (bottom graph).&nbsp; The NAHB notes that prospective buyers are being increasingly sidelined by high home prices.&nbsp;</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9500,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/07/NAHB.jpg\" alt=\"\" class=\"wp-image-9500\"/></figure></div>\n<!-- /wp:image -->','Homebuilders remain optimistic','Homebuilders became slightly less optimistic this month according to the National Association of Home Builders, yet their confidence remains higher than at any point prior to the COVID-19 pandemic. ','publish','closed','closed','','homebuilders-remain-optimistic','','','2021-10-20 09:32:21','2021-10-20 15:32:21','',0,'https://ns2020-investech.investech.com/?post_type=investech-library&#038;p=9498',0,'investech-library','',0);
INSERT INTO `wp_posts` VALUES (9500,3,'2021-07-21 20:04:54','2021-07-21 20:04:54','','NAHB','','inherit','','closed','','nahb','','','2021-07-21 20:04:54','2021-07-21 20:04:54','',9498,'https://ns2020-investech.investech.com/wp-content/uploads/2021/07/NAHB.jpg',0,'attachment','image/jpeg',0);
INSERT INTO `wp_posts` VALUES (9501,3,'2021-07-21 20:05:30','2021-07-21 20:05:30','<!-- wp:paragraph -->\n<p>Homebuilders became slightly less optimistic this month according to the National Association of Home Builders (NAHB), yet their confidence remains higher than at any point prior to the COVID-19 pandemic (top graph below).  Likewise, the Traffic of Prospective Buyers component fell but remains at a historically high level (bottom graph).  The NAHB notes that prospective buyers are being increasingly sidelined by high home prices. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9500,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/07/NAHB.jpg\" alt=\"\" class=\"wp-image-9500\"/></figure></div>\n<!-- /wp:image -->','Homebuilders remain optimistic','Homebuilders became slightly less optimistic this month according to the National Association of Home Builders, yet their confidence remains higher than at any point prior to the COVID-19 pandemic. ','inherit','closed','closed','','9498-revision-v1','','','2021-07-21 20:05:30','2021-07-21 20:05:30','',9498,'https://ns2020-investech.investech.com/?p=9501',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9502,3,'2021-07-21 20:05:32','2021-07-21 20:05:32','<!-- wp:paragraph -->\n<p>Homebuilders became slightly less optimistic this month according to the National Association of Home Builders (NAHB), yet their confidence remains higher than at any point prior to the COVID-19 pandemic (top graph below).  Likewise, the Traffic of Prospective Buyers component fell but remains at a historically high level (bottom graph).  The NAHB notes that prospective buyers are being increasingly sidelined by high home prices. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9500,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/07/NAHB.jpg\" alt=\"\" class=\"wp-image-9500\"/></figure></div>\n<!-- /wp:image -->','Homebuilders remain optimistic','Homebuilders became slightly less optimistic this month according to the National Association of Home Builders, yet their confidence remains higher than at any point prior to the COVID-19 pandemic. ','inherit','closed','closed','','9498-revision-v1','','','2021-07-21 20:05:32','2021-07-21 20:05:32','',9498,'https://ns2020-investech.investech.com/?p=9502',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9504,3,'2021-07-21 20:06:33','2021-07-21 20:06:33','<!-- wp:paragraph -->\n<p>Homebuilders became slightly less optimistic this month according to the National Association of Home Builders (NAHB), yet their confidence remains higher than any point prior to the COVID-19 pandemic (top graph below).  Likewise, the Traffic of Prospective Buyers component fell but remains at a historically high level (bottom graph).  The NAHB notes that prospective buyers are being increasingly sidelined by high home prices. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9500,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/07/NAHB.jpg\" alt=\"\" class=\"wp-image-9500\"/></figure></div>\n<!-- /wp:image -->','Homebuilders remain optimistic','Homebuilders became slightly less optimistic this month according to the National Association of Home Builders, yet their confidence remains higher than at any point prior to the COVID-19 pandemic. ','inherit','closed','closed','','9498-revision-v1','','','2021-07-21 20:06:33','2021-07-21 20:06:33','',9498,'https://ns2020-investech.investech.com/?p=9504',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9505,3,'2021-07-21 20:06:36','2021-07-21 20:06:36','<!-- wp:paragraph -->\n<p>Homebuilders became slightly less optimistic this month according to the National Association of Home Builders (NAHB), yet their confidence remains higher than any point prior to the COVID-19 pandemic (top graph below).  Likewise, the Traffic of Prospective Buyers component fell but remains at a historically high level (bottom graph).  The NAHB notes that prospective buyers are being increasingly sidelined by high home prices. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9500,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/07/NAHB.jpg\" alt=\"\" class=\"wp-image-9500\"/></figure></div>\n<!-- /wp:image -->','Homebuilders remain optimistic','Homebuilders became slightly less optimistic this month according to the National Association of Home Builders, yet their confidence remains higher than at any point prior to the COVID-19 pandemic. ','inherit','closed','closed','','9498-revision-v1','','','2021-07-21 20:06:36','2021-07-21 20:06:36','',9498,'https://ns2020-investech.investech.com/?p=9505',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9506,3,'2021-07-21 20:23:17','2021-07-21 20:23:17','<!-- wp:paragraph -->\n<p>Margin debt climbed in June for the eighth straight month as investors continue to borrow on margin to buy stocks.&nbsp; Historically, peaks in margin debt as a percent of nominal GDP have preceded or coincided with peaks in the stock market.&nbsp; While this measure of leverage continues to make new all-time highs, today’s extreme level of margin debt is indicative of speculative appetite and elevated market risk.&nbsp; When margin debt as a percent of nominal GDP peaks and moves decisively lower it will increase the probability that a major top will be near or possibly already in place.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9518,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/07/margin-debt-vs-sp500.jpg\" alt=\"\" class=\"wp-image-9518\"/></figure></div>\n<!-- /wp:image -->','Margin debt stays the course','Margin debt climbed in June for the eighth straight month as investors continue to borrow on margin to buy stocks.','publish','closed','closed','','margin-debt-stays-the-course','','','2021-10-20 09:26:37','2021-10-20 15:26:37','',0,'https://ns2020-investech.investech.com/?post_type=investech-library&#038;p=9506',0,'investech-library','',0);
INSERT INTO `wp_posts` VALUES (9507,3,'2021-07-21 20:10:21','2021-07-21 20:10:21','<!-- wp:paragraph -->\n<p>The National Bureau of Economic Research (NBER) has officially announced that the pandemic-induced recession has ended.&nbsp; According to the NBER, the recession which began in February 2020 officially ended just two months later in April 2020, making it the shortest U.S. recession on record.&nbsp; This announcement is in-line with leading economic data –such as the Leading Economic Index from the Conference Board– which also bottomed last April.&nbsp;</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9485,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/07/lei_recessions3.jpg\" alt=\"\" class=\"wp-image-9485\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p></p>\n<!-- /wp:paragraph -->','COVID-19 recession declared shortest on record','The National Bureau of Economic Research (NBER) has officially announced that the pandemic-induced recession has ended.','inherit','closed','closed','','9469-revision-v1','','','2021-07-21 20:10:21','2021-07-21 20:10:21','',9469,'https://ns2020-investech.investech.com/?p=9507',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9508,3,'2021-07-21 20:13:10','2021-07-21 20:13:10','<!-- wp:paragraph -->\n<p>The National Bureau of Economic Research (NBER) has officially announced that the pandemic-induced recession has ended.&nbsp; According to the NBER, the recession which began in February 2020 officially ended just two months later in April 2020, making it the shortest U.S. recession on record.&nbsp; This announcement is in-line with leading economic data –such as the Leading Economic Index from the Conference Board– which also bottomed last April.&nbsp;</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9485,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/07/lei_recessions3.jpg\" alt=\"\" class=\"wp-image-9485\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p></p>\n<!-- /wp:paragraph -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->','COVID-19 recession declared shortest on record','The National Bureau of Economic Research (NBER) has officially announced that the pandemic-induced recession has ended.','inherit','closed','closed','','9469-revision-v1','','','2021-07-21 20:13:10','2021-07-21 20:13:10','',9469,'https://ns2020-investech.investech.com/?p=9508',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9509,3,'2021-07-21 20:13:46','2021-07-21 20:13:46','<!-- wp:paragraph -->\n<p>The National Bureau of Economic Research (NBER) has officially announced that the pandemic-induced recession has ended.&nbsp; According to the NBER, the recession which began in February 2020 officially ended just two months later in April 2020, making it the shortest U.S. recession on record.&nbsp; This announcement is in-line with leading economic data –such as the Leading Economic Index from the Conference Board– which also bottomed last April.&nbsp;</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9485,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/07/lei_recessions3.jpg\" alt=\"\" class=\"wp-image-9485\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p></p>\n<!-- /wp:paragraph -->\n\n<!-- wp:separator {\"className\":\"is-style-wide\"} -->\n<hr class=\"wp-block-separator is-style-wide\"/>\n<!-- /wp:separator -->','COVID-19 recession declared shortest on record','The National Bureau of Economic Research (NBER) has officially announced that the pandemic-induced recession has ended.','inherit','closed','closed','','9469-revision-v1','','','2021-07-21 20:13:46','2021-07-21 20:13:46','',9469,'https://ns2020-investech.investech.com/?p=9509',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9510,3,'2021-07-21 20:14:18','2021-07-21 20:14:18','<!-- wp:paragraph -->\n<p>The National Bureau of Economic Research (NBER) has officially announced that the pandemic-induced recession has ended.&nbsp; According to the NBER, the recession which began in February 2020 officially ended just two months later in April 2020, making it the shortest U.S. recession on record.&nbsp; This announcement is in-line with leading economic data –such as the Leading Economic Index from the Conference Board– which also bottomed last April.&nbsp;</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9485,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/07/lei_recessions3.jpg\" alt=\"\" class=\"wp-image-9485\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p></p>\n<!-- /wp:paragraph -->\n\n<!-- wp:spacer {\"height\":52} -->\n<div style=\"height:52px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:separator {\"className\":\"is-style-wide\"} -->\n<hr class=\"wp-block-separator is-style-wide\"/>\n<!-- /wp:separator -->','COVID-19 recession declared shortest on record','The National Bureau of Economic Research (NBER) has officially announced that the pandemic-induced recession has ended.','inherit','closed','closed','','9469-revision-v1','','','2021-07-21 20:14:18','2021-07-21 20:14:18','',9469,'https://ns2020-investech.investech.com/?p=9510',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9512,3,'2021-07-21 20:14:42','2021-07-21 20:14:42','<!-- wp:paragraph -->\n<p>The National Bureau of Economic Research (NBER) has officially announced that the pandemic-induced recession has ended.&nbsp; According to the NBER, the recession which began in February 2020 officially ended just two months later in April 2020, making it the shortest U.S. recession on record.&nbsp; This announcement is in-line with leading economic data –such as the Leading Economic Index from the Conference Board– which also bottomed last April.&nbsp;</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9485,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/07/lei_recessions3.jpg\" alt=\"\" class=\"wp-image-9485\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p></p>\n<!-- /wp:paragraph -->\n\n<!-- wp:spacer {\"height\":50} -->\n<div style=\"height:50px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:separator {\"className\":\"is-style-wide\"} -->\n<hr class=\"wp-block-separator is-style-wide\"/>\n<!-- /wp:separator -->\n\n<!-- wp:paragraph -->\n<p></p>\n<!-- /wp:paragraph -->','COVID-19 recession declared shortest on record','The National Bureau of Economic Research (NBER) has officially announced that the pandemic-induced recession has ended.','inherit','closed','closed','','9469-revision-v1','','','2021-07-21 20:14:42','2021-07-21 20:14:42','',9469,'https://ns2020-investech.investech.com/?p=9512',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9513,3,'2021-07-21 20:18:21','2021-07-21 20:18:21','<!-- wp:paragraph -->\n<p>The ISM Services Index fell to a reading of 60.1% in June, still firmly in expansion territory and just 3.9% below its record high from the month before.&nbsp; While the service sector remains strong, inflation continues to be a primary concern.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>The “Prices Paid” Index for the service sector remains near the highest level in its history, which is proving to be a challenge for many businesses.&nbsp; The Institute for Supply Management highlighted the issue in this month’s report by stating, “<em>Challenges with materials shortages, inflation, logistics and employment resources continue to be an impediment to business conditions.”</em>&nbsp;</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9246,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/ISM-Services-June-2021.jpg\" alt=\"\" class=\"wp-image-9246\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:spacer {\"height\":50} -->\n<div style=\"height:50px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:separator {\"className\":\"is-style-wide\"} -->\n<hr class=\"wp-block-separator is-style-wide\"/>\n<!-- /wp:separator -->','Services remains on solid ground','The ISM Services Index fell to a reading of 60.1% in June, still firmly in expansion territory and just 3.9% below its record high from the month before.  ','inherit','closed','closed','','9213-revision-v1','','','2021-07-21 20:18:21','2021-07-21 20:18:21','',9213,'https://ns2020-investech.investech.com/?p=9513',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9514,3,'2021-07-21 20:19:16','2021-07-21 20:19:16','<!-- wp:paragraph -->\n<p>The manufacturing sector stayed soundly in expansion territory in June, as the ISM Manufacturing Index registered a strong reading of 60.6.&nbsp; Out of the 18 manufacturing industries surveyed, all but one reported growth last month.&nbsp; It wasn’t all good news, however, as the Prices Paid Index reflected mounting inflation pressures by surging to the highest level since 1979!&nbsp; The Institute for Supply Management expands on some of the reasons behind soaring prices by stating, “<em>Record-long raw-material lead times, wide-scale shortages of critical basic materials, rising commodities prices and difficulties in transporting products are continuing to affect all segments of the manufacturing economy.</em>”&nbsp;</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9127,\"width\":650,\"height\":342,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large is-resized\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/ISM-Mfg-Prices-Paid-June-2021.jpg\" alt=\"\" class=\"wp-image-9127\" width=\"650\" height=\"342\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:spacer {\"height\":50} -->\n<div style=\"height:50px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:separator {\"className\":\"is-style-wide\"} -->\n<hr class=\"wp-block-separator is-style-wide\"/>\n<!-- /wp:separator -->\n\n<!-- wp:paragraph -->\n<p></p>\n<!-- /wp:paragraph -->','Manufacturing remains red hot','The manufacturing sector stayed soundly in expansion territory in June, as the ISM Manufacturing Index registered a strong reading of 60.6. ','inherit','closed','closed','','9120-revision-v1','','','2021-07-21 20:19:16','2021-07-21 20:19:16','',9120,'https://ns2020-investech.investech.com/?p=9514',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9515,3,'2021-07-21 20:20:10','2021-07-21 20:20:10','<!-- wp:heading -->\n<h2>Consumer Confidence rebounds, but at what cost?</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Consumer Confidence from the Conference Board increased for the fifth consecutive month as pandemic woes continued to fade.&nbsp; This month’s report showed broad strength, with both the Present Situation and Future Expectations components climbing higher.&nbsp; Gains in the Present Situation component were driven by more favorable views of the labor market.&nbsp; In fact, over 54% of consumers view jobs as “plentiful” versus only 11% who see them as “hard to get”, one of the widest differentials on record.&nbsp;</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>While this bodes well for consumer spending in the months ahead, it highlights that there is a shortage of labor that could lead to persistent wage inflation.&nbsp; According to the Conference Board’s survey, concerns about inflation are already present as consumers’ inflation expectations have surged to a 10-year high.&nbsp; This will be a key development to watch going forward, as the longer that inflation expectations remain elevated, the greater the risk of inflationary psychology taking hold.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9255,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Consumer-Confidence.jpg\" alt=\"\" class=\"wp-image-9255\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:spacer {\"height\":50} -->\n<div style=\"height:50px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->','Consumer confidence rebounds, but...','Consumer Confidence rebounds, but at what cost?  Consumer Confidence from the Conference Board increased for the fifth consecutive month as pandemic woes continued to fade.  ','inherit','closed','closed','','8852-revision-v1','','','2021-07-21 20:20:10','2021-07-21 20:20:10','',8852,'https://ns2020-investech.investech.com/?p=9515',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9516,3,'2021-07-21 20:21:05','2021-07-21 20:21:05','<!-- wp:heading -->\n<h2>No relief on the inflation front</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Inflation is continuing to heat up according to today’s core Personal Consumption Expenditures (PCE) report.&nbsp; Core PCE, which is the Federal Reserve’s preferred inflation measure, rose to 3.4% in May – the highest level since 1992.&nbsp; This is well above the Fed’s 2% inflation target for the second straight month, and as a result, Fed officials have started to feel pressure to scale back on their stimulus efforts.&nbsp; While the debate rages on as to the persistence of today’s pricing pressures, as long as the leading inflation gauges are moving higher (see last Friday’s <a href=\"https://ns2020-investech.investech.com/subscriber-library/a-leading-inflation-indicator-points-higher/\" target=\"_blank\" rel=\"noreferrer noopener\">report</a>), any inflationary surprises will likely continue to be to the upside.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9387,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Core-PCE.jpg\" alt=\"\" class=\"wp-image-9387\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p></p>\n<!-- /wp:paragraph -->\n\n<!-- wp:spacer {\"height\":52} -->\n<div style=\"height:52px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:paragraph -->\n<p></p>\n<!-- /wp:paragraph -->','No relief on the inflation front','Inflation is continuing to heat up according to today’s core Personal Consumption Expenditures (PCE) report.  ','inherit','closed','closed','','8813-revision-v1','','','2021-07-21 20:21:05','2021-07-21 20:21:05','',8813,'https://ns2020-investech.investech.com/?p=9516',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9517,3,'2021-07-21 20:21:48','2021-07-21 20:21:48','<!-- wp:heading -->\n<h2>A leading inflation indicator points higher</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Inflation has emerged with a vengeance in recent months, and the FIBER Leading Inflation Index (LII) suggests that that pricing pressures are continuing to mount.&nbsp; As shown in the graph below, the FIBER LII has historically led turning points in the Consumer Price Index (CPI) by several months. While certain elements of today’s inflation will likely moderate in the months ahead, this historically reliable forecasting model indicates that inflation is likely to continue higher in the near term.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9079,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/07/FIBER-LII-CPI.jpg\" alt=\"\" class=\"wp-image-9079\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:spacer {\"height\":50} -->\n<div style=\"height:50px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->','Leading inflation indicator points higher','Inflation has emerged with a vengeance in recent months, and the FIBER Leading Inflation Index (LII) suggests that that pricing pressures are continuing to mount.','inherit','closed','closed','','8911-revision-v1','','','2021-07-21 20:21:48','2021-07-21 20:21:48','',8911,'https://ns2020-investech.investech.com/?p=9517',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9518,3,'2021-07-21 20:21:49','2021-07-21 20:21:49','','margin-debt-vs-sp500','','inherit','','closed','','margin-debt-vs-sp500','','','2021-07-21 20:21:49','2021-07-21 20:21:49','',9506,'https://ns2020-investech.investech.com/wp-content/uploads/2021/07/margin-debt-vs-sp500.jpg',0,'attachment','image/jpeg',0);
INSERT INTO `wp_posts` VALUES (9519,3,'2021-07-21 20:23:17','2021-07-21 20:23:17','<!-- wp:paragraph -->\n<p>Margin debt climbed in June for the eighth straight month as investors continue to borrow on margin to buy stocks.  Historically, peaks in margin debt as a percent of nominal GDP have preceded or coincided with peaks in the stock market.  While this measure of leverage continues to make new all-time highs, today’s extreme level of margin debt is indicative of speculative appetite and elevated market risk.  When margin debt as a percent of nominal GDP peaks and moves decisively lower it will increase the probability that a major top will be near or possibly already in place.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9518,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/07/margin-debt-vs-sp500.jpg\" alt=\"\" class=\"wp-image-9518\"/></figure></div>\n<!-- /wp:image -->','Margin debt stays the course','Margin debt climbed in June for the eighth straight month as investors continue to borrow on margin to buy stocks.','inherit','closed','closed','','9506-revision-v1','','','2021-07-21 20:23:17','2021-07-21 20:23:17','',9506,'https://ns2020-investech.investech.com/?p=9519',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9520,3,'2021-07-21 20:23:19','2021-07-21 20:23:19','<!-- wp:paragraph -->\n<p>Margin debt climbed in June for the eighth straight month as investors continue to borrow on margin to buy stocks.  Historically, peaks in margin debt as a percent of nominal GDP have preceded or coincided with peaks in the stock market.  While this measure of leverage continues to make new all-time highs, today’s extreme level of margin debt is indicative of speculative appetite and elevated market risk.  When margin debt as a percent of nominal GDP peaks and moves decisively lower it will increase the probability that a major top will be near or possibly already in place.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9518,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/07/margin-debt-vs-sp500.jpg\" alt=\"\" class=\"wp-image-9518\"/></figure></div>\n<!-- /wp:image -->','Margin debt stays the course','Margin debt climbed in June for the eighth straight month as investors continue to borrow on margin to buy stocks.','inherit','closed','closed','','9506-revision-v1','','','2021-07-21 20:23:19','2021-07-21 20:23:19','',9506,'https://ns2020-investech.investech.com/?p=9520',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9521,3,'2021-07-21 20:33:33','2021-07-21 20:33:33','<!-- wp:paragraph -->\n<p>Thank you for requesting a sample of the <em><strong>InvesTech Research </strong></em>newsletter!  We believe InvesTech can offer you a level of investment information and guidance you can\'t find elsewhere. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:buttons -->\n<div class=\"wp-block-buttons\"><!-- wp:button -->\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link\" href=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/04/free-sample.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">Download Now</a></div>\n<!-- /wp:button --></div>\n<!-- /wp:buttons -->\n\n<!-- wp:spacer {\"height\":50} -->\n<div style=\"height:50px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:heading -->\n<h2>Ready to Subscribe?</h2>\n<!-- /wp:heading -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Subscribe and receive the monthly <em>InvesTech Research</em> newsletter, weekly Market Insights, real-time updates to our proprietary indicators, and immediate access to subscriber\'s only content.  </h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>We provide a no-risk money-back guarantee.  You may cancel at any time and receive a 100% refund on the unused portion of your subscription.  </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:buttons -->\n<div class=\"wp-block-buttons\"><!-- wp:button {\"className\":\"is-style-high-impact\"} -->\n<div class=\"wp-block-button is-style-high-impact\"><a class=\"wp-block-button__link\">Subscribe</a></div>\n<!-- /wp:button --></div>\n<!-- /wp:buttons -->','Download Free Sample','','inherit','closed','closed','','9303-revision-v1','','','2021-07-21 20:33:33','2021-07-21 20:33:33','',9303,'https://ns2020-investech.investech.com/?p=9521',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9523,3,'2021-07-21 20:34:04','2021-07-21 20:34:04','<!-- wp:spacer {\"height\":50} -->\n<div style=\"height:50px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:paragraph -->\n<p>Thank you for requesting a sample of the <em><strong>InvesTech Research </strong></em>newsletter!  We believe InvesTech can offer you a level of investment information and guidance you can\'t find elsewhere. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:buttons -->\n<div class=\"wp-block-buttons\"><!-- wp:button -->\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link\" href=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/04/free-sample.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">Download Now</a></div>\n<!-- /wp:button --></div>\n<!-- /wp:buttons -->\n\n<!-- wp:spacer {\"height\":50} -->\n<div style=\"height:50px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:heading -->\n<h2>Ready to Subscribe?</h2>\n<!-- /wp:heading -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Subscribe and receive the monthly <em>InvesTech Research</em> newsletter, weekly Market Insights, real-time updates to our proprietary indicators, and immediate access to subscriber\'s only content.  </h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>We provide a no-risk money-back guarantee.  You may cancel at any time and receive a 100% refund on the unused portion of your subscription.  </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:buttons -->\n<div class=\"wp-block-buttons\"><!-- wp:button {\"className\":\"is-style-high-impact\"} -->\n<div class=\"wp-block-button is-style-high-impact\"><a class=\"wp-block-button__link\">Subscribe</a></div>\n<!-- /wp:button --></div>\n<!-- /wp:buttons -->','Download Free Sample','','inherit','closed','closed','','9303-revision-v1','','','2021-07-21 20:34:04','2021-07-21 20:34:04','',9303,'https://ns2020-investech.investech.com/?p=9523',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9525,3,'2021-07-21 20:40:09','2021-07-21 20:40:09','<!-- wp:spacer {\"height\":50} -->\n<div style=\"height:50px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:paragraph -->\n<p>Thank you for requesting a sample of the <em><strong>InvesTech Research </strong></em>newsletter!  We believe InvesTech can offer you a level of investment information and guidance you can\'t find elsewhere. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:buttons -->\n<div class=\"wp-block-buttons\"><!-- wp:button -->\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link\" href=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/04/free-sample.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">Download Now</a></div>\n<!-- /wp:button --></div>\n<!-- /wp:buttons -->\n\n<!-- wp:spacer {\"height\":50} -->\n<div style=\"height:50px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Ready to Subscribe?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Subscribe and receive the monthly <em>InvesTech Research</em> newsletter, weekly Market Insights, real-time updates to our proprietary indicators, and immediate access to subscriber\'s only content.  </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>We provide a no-risk money-back guarantee.  You may cancel at any time and receive a 100% refund on the unused portion of your subscription.  </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:buttons -->\n<div class=\"wp-block-buttons\"><!-- wp:button {\"className\":\"is-style-high-impact\"} -->\n<div class=\"wp-block-button is-style-high-impact\"><a class=\"wp-block-button__link\">Subscribe</a></div>\n<!-- /wp:button --></div>\n<!-- /wp:buttons -->','Download Free Sample','','inherit','closed','closed','','9303-revision-v1','','','2021-07-21 20:40:09','2021-07-21 20:40:09','',9303,'https://ns2020-investech.investech.com/?p=9525',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9526,3,'2021-07-21 20:41:30','2021-07-21 20:41:30','<!-- wp:spacer {\"height\":50} -->\n<div style=\"height:50px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:paragraph -->\n<p>Thank you for requesting a sample of the <em><strong>InvesTech Research </strong></em>newsletter!  We believe InvesTech can offer you a level of investment information and guidance you can\'t find elsewhere. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:buttons -->\n<div class=\"wp-block-buttons\"><!-- wp:button -->\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link\" href=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/04/free-sample.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">Download Free Sample</a></div>\n<!-- /wp:button --></div>\n<!-- /wp:buttons -->\n\n<!-- wp:spacer {\"height\":50} -->\n<div style=\"height:50px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Ready to Subscribe?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Subscribe and receive the monthly <em>InvesTech Research</em> newsletter, weekly Market Insights, real-time updates to our proprietary indicators, and immediate access to subscriber\'s only content.  </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>We provide a no-risk money-back guarantee.  You may cancel at any time and receive a 100% refund on the unused portion of your subscription.  </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:buttons -->\n<div class=\"wp-block-buttons\"><!-- wp:button {\"className\":\"is-style-high-impact\"} -->\n<div class=\"wp-block-button is-style-high-impact\"><a class=\"wp-block-button__link\">Subscribe</a></div>\n<!-- /wp:button --></div>\n<!-- /wp:buttons -->','Download Free Sample','','inherit','closed','closed','','9303-revision-v1','','','2021-07-21 20:41:30','2021-07-21 20:41:30','',9303,'https://ns2020-investech.investech.com/?p=9526',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9528,3,'2021-07-21 20:43:52','2021-07-21 20:43:52','<!-- wp:spacer {\"height\":50} -->\n<div style=\"height:50px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column {\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:66.66%\"><!-- wp:paragraph -->\n<p>Thank you for requesting a sample of the <em><strong>InvesTech Research </strong></em>newsletter! We believe InvesTech can offer you a level of investment information and guidance you can\'t find elsewhere.</p>\n<!-- /wp:paragraph --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:33.33%\"><!-- wp:buttons -->\n<div class=\"wp-block-buttons\"><!-- wp:button -->\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link\" href=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/04/free-sample.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">Download Free Sample</a></div>\n<!-- /wp:button --></div>\n<!-- /wp:buttons --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:paragraph -->\n<p>Thank you for requesting a sample of the <em><strong>InvesTech Research </strong></em>newsletter!  We believe InvesTech can offer you a level of investment information and guidance you can\'t find elsewhere. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:buttons -->\n<div class=\"wp-block-buttons\"><!-- wp:button -->\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link\" href=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/04/free-sample.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">Download Free Sample</a></div>\n<!-- /wp:button --></div>\n<!-- /wp:buttons -->\n\n<!-- wp:spacer {\"height\":50} -->\n<div style=\"height:50px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Ready to Subscribe?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Subscribe and receive the monthly <em>InvesTech Research</em> newsletter, weekly Market Insights, real-time updates to our proprietary indicators, and immediate access to subscriber\'s only content.  </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>We provide a no-risk money-back guarantee.  You may cancel at any time and receive a 100% refund on the unused portion of your subscription.  </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:buttons -->\n<div class=\"wp-block-buttons\"><!-- wp:button {\"className\":\"is-style-high-impact\"} -->\n<div class=\"wp-block-button is-style-high-impact\"><a class=\"wp-block-button__link\">Subscribe</a></div>\n<!-- /wp:button --></div>\n<!-- /wp:buttons -->\n\n<!-- wp:paragraph -->\n<p></p>\n<!-- /wp:paragraph -->','Download Free Sample','','inherit','closed','closed','','9303-revision-v1','','','2021-07-21 20:43:52','2021-07-21 20:43:52','',9303,'https://ns2020-investech.investech.com/?p=9528',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9529,3,'2021-07-21 20:44:31','2021-07-21 20:44:31','<!-- wp:spacer {\"height\":50} -->\n<div style=\"height:50px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column {\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:66.66%\"><!-- wp:paragraph -->\n<p>Thank you for requesting a sample of the <em><strong>InvesTech Research </strong></em>newsletter! We believe InvesTech can offer you a level of investment information and guidance you can\'t find elsewhere.</p>\n<!-- /wp:paragraph --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:33.33%\"><!-- wp:spacer {\"height\":50} -->\n<div style=\"height:50px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:buttons -->\n<div class=\"wp-block-buttons\"><!-- wp:button -->\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link\" href=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/04/free-sample.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">Download Free Sample</a></div>\n<!-- /wp:button --></div>\n<!-- /wp:buttons --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:paragraph -->\n<p>Thank you for requesting a sample of the <em><strong>InvesTech Research </strong></em>newsletter!  We believe InvesTech can offer you a level of investment information and guidance you can\'t find elsewhere. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:buttons -->\n<div class=\"wp-block-buttons\"><!-- wp:button -->\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link\" href=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/04/free-sample.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">Download Free Sample</a></div>\n<!-- /wp:button --></div>\n<!-- /wp:buttons -->\n\n<!-- wp:spacer {\"height\":50} -->\n<div style=\"height:50px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Ready to Subscribe?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Subscribe and receive the monthly <em>InvesTech Research</em> newsletter, weekly Market Insights, real-time updates to our proprietary indicators, and immediate access to subscriber\'s only content.  </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>We provide a no-risk money-back guarantee.  You may cancel at any time and receive a 100% refund on the unused portion of your subscription.  </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:buttons -->\n<div class=\"wp-block-buttons\"><!-- wp:button {\"className\":\"is-style-high-impact\"} -->\n<div class=\"wp-block-button is-style-high-impact\"><a class=\"wp-block-button__link\">Subscribe</a></div>\n<!-- /wp:button --></div>\n<!-- /wp:buttons -->\n\n<!-- wp:paragraph -->\n<p></p>\n<!-- /wp:paragraph -->','Download Free Sample','','inherit','closed','closed','','9303-revision-v1','','','2021-07-21 20:44:31','2021-07-21 20:44:31','',9303,'https://ns2020-investech.investech.com/?p=9529',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9530,3,'2021-07-21 20:45:28','2021-07-21 20:45:28','<!-- wp:spacer {\"height\":50} -->\n<div style=\"height:50px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column {\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:66.66%\"><!-- wp:paragraph -->\n<p>Thank you for requesting a sample of the <em><strong>InvesTech Research </strong></em>newsletter! We believe InvesTech can offer you a level of investment information and guidance you can\'t find elsewhere.</p>\n<!-- /wp:paragraph --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:33.33%\"><!-- wp:spacer {\"height\":50} -->\n<div style=\"height:50px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:buttons -->\n<div class=\"wp-block-buttons\"><!-- wp:button -->\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link\" href=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/04/free-sample.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">Download Free Sample</a></div>\n<!-- /wp:button --></div>\n<!-- /wp:buttons --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:paragraph -->\n<p>Thank you for requesting a sample of the <em><strong>InvesTech Research </strong></em>newsletter!  We believe InvesTech can offer you a level of investment information and guidance you can\'t find elsewhere. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:buttons -->\n<div class=\"wp-block-buttons\"><!-- wp:button -->\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link\" href=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/04/free-sample.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">Download Free Sample</a></div>\n<!-- /wp:button --></div>\n<!-- /wp:buttons -->\n\n<!-- wp:spacer {\"height\":50} -->\n<div style=\"height:50px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Ready to Subscribe?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Subscribe and receive the monthly <em>InvesTech Research</em> newsletter, weekly Market Insights, real-time updates to our proprietary indicators, and immediate access to subscriber\'s only content.  </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>We provide a no-risk money-back guarantee.  You may cancel at any time and receive a 100% refund on the unused portion of your subscription.  </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:buttons -->\n<div class=\"wp-block-buttons\"><!-- wp:button {\"className\":\"is-style-high-impact\"} -->\n<div class=\"wp-block-button is-style-high-impact\"><a class=\"wp-block-button__link\">Subscribe Now</a></div>\n<!-- /wp:button --></div>\n<!-- /wp:buttons -->\n\n<!-- wp:paragraph -->\n<p></p>\n<!-- /wp:paragraph -->','Download Free Sample','','inherit','closed','closed','','9303-revision-v1','','','2021-07-21 20:45:28','2021-07-21 20:45:28','',9303,'https://ns2020-investech.investech.com/?p=9530',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9531,3,'2021-07-21 20:46:12','2021-07-21 20:46:12','<!-- wp:spacer {\"height\":50} -->\n<div style=\"height:50px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column {\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:66.66%\"><!-- wp:paragraph -->\n<p>Thank you for requesting a sample of the <em><strong>InvesTech Research </strong></em>newsletter! We believe InvesTech can offer you a level of investment information and guidance you can\'t find elsewhere.</p>\n<!-- /wp:paragraph --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:33.33%\"><!-- wp:spacer {\"height\":18} -->\n<div style=\"height:18px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:buttons -->\n<div class=\"wp-block-buttons\"><!-- wp:button -->\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link\" href=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/04/free-sample.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">Download Free Sample</a></div>\n<!-- /wp:button --></div>\n<!-- /wp:buttons --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:spacer {\"height\":50} -->\n<div style=\"height:50px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Ready to Subscribe?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Subscribe and receive the monthly <em>InvesTech Research</em> newsletter, weekly Market Insights, real-time updates to our proprietary indicators, and immediate access to subscriber\'s only content.  </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>We provide a no-risk money-back guarantee.  You may cancel at any time and receive a 100% refund on the unused portion of your subscription.  </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:buttons -->\n<div class=\"wp-block-buttons\"><!-- wp:button {\"className\":\"is-style-high-impact\"} -->\n<div class=\"wp-block-button is-style-high-impact\"><a class=\"wp-block-button__link\">Subscribe Now</a></div>\n<!-- /wp:button --></div>\n<!-- /wp:buttons -->\n\n<!-- wp:paragraph -->\n<p></p>\n<!-- /wp:paragraph -->','Download Free Sample','','inherit','closed','closed','','9303-revision-v1','','','2021-07-21 20:46:12','2021-07-21 20:46:12','',9303,'https://ns2020-investech.investech.com/?p=9531',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9532,3,'2021-07-21 20:46:35','2021-07-21 20:46:35','<!-- wp:spacer {\"height\":50} -->\n<div style=\"height:50px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column {\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:66.66%\"><!-- wp:paragraph -->\n<p>Thank you for requesting a sample of the <em><strong>InvesTech Research </strong></em>newsletter! We believe InvesTech can offer you a level of investment information and guidance you can\'t find elsewhere.</p>\n<!-- /wp:paragraph --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:33.33%\"><!-- wp:spacer {\"height\":18} -->\n<div style=\"height:18px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:buttons -->\n<div class=\"wp-block-buttons\"><!-- wp:button -->\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link\" href=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/04/free-sample.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">Download Free Sample</a></div>\n<!-- /wp:button --></div>\n<!-- /wp:buttons --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:spacer {\"height\":20} -->\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Ready to Subscribe?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Subscribe and receive the monthly <em>InvesTech Research</em> newsletter, weekly Market Insights, real-time updates to our proprietary indicators, and immediate access to subscriber\'s only content.  </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>We provide a no-risk money-back guarantee.  You may cancel at any time and receive a 100% refund on the unused portion of your subscription.  </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:buttons -->\n<div class=\"wp-block-buttons\"><!-- wp:button {\"className\":\"is-style-high-impact\"} -->\n<div class=\"wp-block-button is-style-high-impact\"><a class=\"wp-block-button__link\">Subscribe Now</a></div>\n<!-- /wp:button --></div>\n<!-- /wp:buttons -->\n\n<!-- wp:paragraph -->\n<p></p>\n<!-- /wp:paragraph -->','Download Free Sample','','inherit','closed','closed','','9303-revision-v1','','','2021-07-21 20:46:35','2021-07-21 20:46:35','',9303,'https://ns2020-investech.investech.com/?p=9532',0,'revision','',0);
