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Arrowhead Asset Management Investment & Money Update (11/20/2017)

A Summary of Our 2018 Money Management Strategy

Wow! The US stock market appears to be the "teflon" stock market. Even total political economic sleaze doesn't seem to slow its current upward trajectory.

It's too bizarre for reality! Donald Trump (and his regime) has moved even more to the dark side - just to get his bogus elite tax plan approved - by literally endorsing a well-documented "alleged" pedophile for election to the US Senate. Without any moral compass whatsoever, Trump says he believes the mentally deranged Moore over his numerous female accusers.  

The two-party system is already economically corrupted. So now we are going to end up groveling in the lowest form of representational moral sickness as well? I very reluctantly voted for Hillary Clinton. As flawed as she was as a candidate, I now know I voted for the clear lesser of two evils.

How low will our leadership go - to pass a tax plan that mostly benefits the rich?

Economically, are we so desparate - as Donald Trump would like us to believe - we need Roy Moore to pass a tax plan for corporations that are already flush with cash, who don't even need tax cuts, who's stock prices are at all time highs, and who's executives are getting paid billions of dollars in salary and stock options during their leadership tenures?

And why do we allow Trump's constant financial, public health & public safety deregulation efforts - which at some point is guaranteed to create financial and public health & safety disasters for consumers and citizens?

Yes, the donor class tax cuts are temporarily good for stock prices. And yes, making the rich richer and the middle class poorer is good for our investment returns (at least for awhile).

But as we will see sooner rather than later, the "Trickle Up" wealth effect from these unnecessary tax cuts and deregulation efforts will do very little economically to create good paying jobs for middle class and/or unemployed Americans.

We can expect to see the Nation’s "soon to increase even more" wealth disparity create problems for both the US consumer and the stock markets. Maybe not next year, but soon thereafter. It is just a matter of time, sad to say!

Even now, Wall Street has now found another reason to get late investors to pile in: By creating a new merger and acquisition (M&A) mania, primarily in the 1) semiconductor and 2) media sectors of the US economy.

These current M&A trends should keep our investments going up at least through the end of the year (or longer).

Understanding How the Stock Markets "Discount Future Growth"

Let me clarify what "how the stock markets discount future growth" means.

Essentially, the phrase means that current price valuations we now see in the global stock markets have already incorporated most of the "good future growth" news they can either imagine or fabricate into future stock prices - something like six months ahead.

Of course there will be some short-term economic or corporate news items that will continue to create "noise" stock price adjustments in the future.

Nevertheless, given that today's stock market prices are probably "fully valued" for the next six months, we need to consider making the following market adjustments as this Update is being written:

1) Systematically reduce the overall portfolio percentages of our current growth investments (that have already done well for us);

2) Prudently rotate some of our 'growth" money into investments that are starting to attract new institutional money.

We will immediately begin making investment portfolio adjustments as needed.

Please contact me if you have any questions about this Update - or your current Fidelity portfolios. 

Rocky Boschert

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