Seeing in Patterns

  • James H. Lee

As a finance guy, I'm fairly obsessed with the question of "what comes next?" Statistical pioneer Jim Hurst once said that 75% of forecasting is about finding the right trends, and 25% is about understanding cycles.

Next month, I'll be hosting an event at the Grand Opera House and sharing some of the biggest trends for the next decade (details below). This is really fun stuff. But there is simply so much information to provide that I won't be able to talk much about cycles, which I hope to do here.

One of the most statistically significant cycles is happening right now. And it occurs without fail. It is called "autumn". This time of year, people get serious about their finances.

It is also the time of renewed interest in the markets. Here is the seasonal pattern for stocks in the U.S.:

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Waking Up in Tomorrow

  • James H. Lee

The annual World Future Society conference was just held in San Francisco. As always, this event stirs up plenty of interesting conversations. Here are a few themes that futurists are talking about now...

More Utopias, Please!

Worst-case scenarios are the B-movies of the foresight world. Cheap, dramatically compelling, and easy to make -- these stories are as popular with media pundits as they are with Hollywood producers. Yet, we are all getting fatigued by the drama of apocalyptic narratives are looking to co-create a better world. We need more positive visions of the future.

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mortgage-balanceAre you looking for peace of mind and significantly improved monthly cash flow? This could be a great time to pay down or pay off your mortgage.

There is a certain sense of euphoria that comes with paying off a mortgage, or making the last payment on a car loan. Your monthly expenses drop significantly, and you now have cash flow for savings, spending, or maybe working just a little bit less.

Retirement is much more achievable if you own your own home.

Let’s look at some different options for “safe money.” 30-year fixed mortgages average about 3.9% in the greater Philadelphia area, according to Meanwhile, current rates for 1-yr CD’s average 0.27%. Five-year U.S. Treasury bonds yield 1.5%. Five-year fixed annuities pay about 2.5%, depending on the issuer.

Comparatively speaking, you may be paying a higher rate on your mortgage than you are receiving from some of your investment holdings. Carrying a mortgage does offer a tax deduction on the interest paid each year. However, this tends to decline over time, and may be reduced further if you are subject to AMT (Alternative Minimum Tax). Depending on your situation, it may be possible to obtain a greater tax benefit by paying off a mortgage, and increasing monthly contributions to a 401(k) or other retirement plan.

This all suggests that owning low-rate bonds and CDs might not always make sense, particularly if you still have a mortgage.

Keep in mind that it is always good to have a small nest egg available to cover life’s surprises, but if you want real stability and security, it may also makes sense to own the roof over your head.

-Jim Lee, CFA, CMT, CFP

Disclosure: Information contained herein is for educational purposes only and is not to be considered a recommendation to buy or sell any security or investment advice. Consult your advisor.

Inside the Appleverse

  • James H. Lee

Apple StoreAt times, it seems like the entire tech universe orbits around just one company.

Nothing is bigger than the Big Apple. Not only is it the largest stock holding for individual investors, but also for hedge fund managers and StratFI clients, too. Apple is now bigger than Exxon Mobil by market capitalization, and is the most highly valued company in the world.

That kind of gravitational mass attracts significant influence. Apple now represents 4% of the S&P 500 index. Last year, shares rose a stunning 40%, contributing a full 1.5% to the return of the popular benchmark. As investors put money into index funds, they are often buying shares of Apple.

Without Apple, the tech world would be a much less exciting place. A recent Zero Hedge article notes that “blended Q1 Y/Y EPS growth for the Information Technology sector is 0.7% [but] excluding Apple, the blended earnings growth rate for the sector would fall to -5.1%.”

Apple is pretty much holding the tech sector together right now. So why not hitch a ride on a rising star?

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Solving the Puzzle of Sustainable Success

  • James H. Lee


Make money, have fun, be excellent.  This is all you that you really need to know to have a sustainable and fulfilling career.  So simple, yet many people lose sight of this. 

Let's face it, making money is the reason why most of us go to work. If your business isn't generating cash flow and paying the bills, you won't be in business for too long... 

Having fun is about maintaining positive relationships.  This attracts new customers and makes work pleasant and joyful.  Lose sight of this and you'll eventually burn-out. 

Being excellent involves becoming your own best competition.  It is about staying focused and engaged in your work, and always striving to make the world a better place.  Remember that you can't grow if you aren't willing to stretch a little! 

This is a package deal - each part makes the others possible.  Make a promise to do these three things every day and watch your life flourish. 

-Jim Lee, CFA, CMT, CFP

Google OfficeThis has been a big week for Apple, as it officially announces a watch that connects to the popular iPhone. Apple is now the largest publicly-traded company in the U.S., bigger than even Exxon Mobil. Nonetheless, I'm more of a Google fanboy.  Apple has a lot of very smart people doing cool things. Google has brilliant people doing things that leave me in state of complete awe.

A dozen years ago, when asked how the company could make money in free keyword search, Larry Page responded that he was really in the business of developing artificial intelligence (AI). The challenge was knowing the difference between what users type as a search, and understanding what they really want.

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