Category Archives: Quarterly

Topley’s Top 10 – August 20, 2020

1. Hottest Momentum ETF in U.S. is QMOM

(Alpha Architects)

QMOM +26% vs. MTUM +15.5% vs. SPY +5%

Concentrated MO MO  50 Holdings

2. Five Year Inflation Expectations Well Off Bottom

Markets were paying close attention to minutes from the Fed’s recent meeting due later in the day for any hints on what the Fed could announce in September – Some investors speculated the Fed will adopt an average inflation target, which would seek to push inflation above 2% for some time.

The $20 trillion U.S. Treasury market is giving the Federal Reserve a thumbs-up for its efforts to revive inflation after the coronavirus pandemic threatened to inflict a damaging bout of deflation on the U.S. economy – The best measure of that is inflation-adjusted interest rates on 10-year Treasury bonds, which have plunged well below zero as nominal yields held fairly steady. Other signs of success include rising expectations for future prices among U.S. households

Dave Lutz at Jones Trading

3. Utilities Dividend Vs. 10 Year at 25 Year High.

Liz Ann Sonders-Schwab

Utilities Still Well Below Highs

4. I Agree with Ben Carlson…The Chart Almost Looks Fake….TSLA

5. Gold at Historically High Levels in Real (Inflation Adjusted) Terms

Larry Swedroe

As you can see in the following table, the recent rally in gold has it trading at historically high levels in real terms.

How important is the real price of gold in terms of future returns? In their 2015 study “ The Golden Dilemma,” Claude Erb and Campbell Harvey found that “the real price of gold was a more important driver of future nominal and real gold returns than the realized rate of inflation.” With that in mind, is now a good time to buy gold? Erb, Harvey, and Tadas Viskanta, authors of the August 2020 paper “ Gold, the Golden Constant, COVID-19, ‘Massive Passives’ and Déjà Vu,” analyzed the historical evidence to help investors determine the answer to that question.

Now Might Not Be A Good Time To Buy Gold

6. Millennials Not Going for Big Oil Careers

By Rebecca Elliott-WSJ

7. Number of Patents Issued Since 1999 Has Doubled.

Jim OShaughnessy

8. Lots of Good News on Housing Starts But We Are Seeing Spike in Mortgage Delinquencies.

Adam Tooze, @adam_tooze

Mortgage delinquencies spiked in the second quarter. As the unemployment crisis deepens, will the surge continue? Data from the invaluable


9.Your Mortgage Refinance Could Cost Thousands More Thanks To New Fee

Natalie Campisi, Forbes Staff

Refinancing is set to get more expensive this fall. A new fee, known as the “adverse market refinance fee” (Fannie Mae) or the “market condition credit fee” (Freddie Mac), will be assessed to most refinance mortgage loans sold to Fannie Mae and Freddie Mac starting Sept. 1. The fee is a flat 0.5% or 50 basis points of the total loan amount, adding hundreds or even thousands of dollars to the cost of a refinance.

The new fee comes at a time when mortgage rates are falling to record-breaking lows and refinance activity is on the rise. Mortgage refinance activity last week was up by 9% from the prior week and was 47% higher than the same time last year, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending Aug. 7, 2020.

The reason for the fee is to offset higher risk due to a shaky economy, both Fannie Mae and Freddie Mac said in bulletins issued Wednesday night. Most refinances, including cash-out refinances, would be subject to the fee. 

“As a result of risk management and loss forecasting precipitated by COVID-19 related economic and market uncertainty, we are introducing a new Market Condition Credit Fee in Price,” according to a statement by Freddie Mac.

New Fee Runs Counter to Fed’s Efforts to Keep Costs Down

For a borrower refinancing a $350,000 mortgage, the fee would tack on an additional $1,750. For someone with twice that mortgage, the fee would add $3,500 on a $700,000 refinance.


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For some, this fee is counterproductive to efforts the Federal Reserve has made since the start of the pandemic to encourage lending activity while making loans affordable by keeping mortgage interest rates low.

“The housing market has been able to withstand many of the most severe effects of the COVID-19 pandemic,” MBA President Bob Broeksmit said in a statement. “The recent refinance activity has not only helped homeowners lower their monthly payments, but it is also reducing risk to the (government-sponsored enterprises) and taxpayers. At a time when the Federal Reserve is purchasing $40 billion in agency (mortgage-backed securities) per month to help reduce financing costs for mortgage borrowers to support the broader economy, this action raises those costs and undermines the Federal Reserve’s policy.”

Fee Also Applies to Most Specialty Loan Refinance Programs 

Both Fannie Mae and Freddie Mac have loan programs designed to help a wide variety of borrowers in need. These programs have caps on the total amount of fees that can be assessed, however, the new adverse market refinance fee would apply to all of these programs, regardless of the cap:

·         Fannie Mae’s HomeReady refinance program is designed for borrowers facing financial challenges, and its high loan-to-value (LTV) refinance program offers a chance for borrowers making on-time payments to refinance their mortgages even if their LTV exceeds the maximum for standard cash-out refinances. 

·         Freddie Mac’s Home Possible mortgage refinance program is for low-income homeowners, and its Enhanced Relief Refinance mortgage program was created for borrowers who can’t refinance because of a drop in property values. 

The only loans that are exempt from the new fee are home loans that qualify for single-closing interim construction financing and permanent financing, which is one mortgage for borrowers who are building new homes. This end-to-end loan covers buying the land, through the construction phase into the permanent home loan.

What You Should Do If You Want to Refinance

Despite the new fee, some borrowers will still be able to save money on their monthly mortgage payments, as well as the total interest paid on their loans, by refinancing. Mortgage rates are currently tracking below 3%, which puts nearly 18 million people in line to save money by refinancing, according to Black Knight, a mortgage technology, data and analytics provider.

Along with the new fee announced on Wednesday, there are closing costs that should be factored into your decision. Typically, these costs are about 2% to 3% of your total loan amount. Closing costs usually include title and insurance fees, appraisals, application fees and, in some areas, attorney fees. 

Other things to consider before you refinance is whether you plan on moving. If you’re going to sell your home within a few years, you likely won’t save enough money refinancing to make up for the amount you spend in closing fees. 

Finally, make sure your credit score is high enough to snag the interest rate you need to save money. Although many lenders are advertising sub-3% rates on 30- and 15-year mortgage refinances, usually only borrowers with above average credit scores (in the 700 and above range) will qualify.

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Natalie Campisi

10. Ten habits of bad management

 Image from


Jan 282019by Andre de WaalPrint This Article

If you’re looking to run a high-performance organization, you need to be able to be able to recognize the signs of bad management. If low-performing managers are not dealt with, an organization will never be able to become excellent. Here are ten habits to look out for that no organization should put up with:

Bad managers clean up the mess of their predecessors – even when there is no mess.

When appointed in a new position, the bad manager claims that the predecessor has made such a big mess of the department that it will take at least one year, if not more, to get everything in order, and of course the bad manager cannot possibly work yet on achieving the departmental targets this year…maybe next year too.

Bad managers are always busy, busy, busy

They are involved in many, many projects; in fact, they’re so busy that there isn’t enough time to work on regular tasks! And because these projects are vital for the success of the organization (or so they say), bad managers cannot possibly be expected to work on their departmental targets. They will get to that when their other projects are finished…which they never are.

Bad managers know how to play the goals game

They know that departmental goals should be loose, with lots of slack, which means the targets will be very easy to achieve. Bad managers will never get optimal results from their departments; but that doesn’t matter to them, bad managers would rather have low performance than run the risk of punishment for falling short of ambitious targets.

Bad managers only manage from a distance

Bad managers love to use performance indicators because these make it possible to practice hands-off management. This in turn makes it easy for bad managers to avoid the day to day department activities altogether. And of course, if anything goes wrong, they can dodge accountability: they weren’t there, after all!

Bad managers always blame somebody else

Bad managers have a host of excuses at their disposal when they don’t achieve departmental targets. They blame the management reports because these do not accurately reflect performance; their own reports show that they did achieve the targets.

Bad managers blame the outside world: the economy was going down, it has rained too much, it hasn’t rained enough, whatever – but that is the reason everything was going against the department and therefore it was just impossible to achieve the targets! Next year, they say, will be better. They blame the weakest colleague, it was his or her fault the department floundered. So the organization first needs to hire someone new before they can be expected to work on achieving their targets.

Bad managers make lengthy, impressive plans

When writing up the latest game plan, bad managers know that expansive, wordy, and complex plans always impress top management because it gives the impression that they are on top of their game and have thought of everything.

They also know that you can bury all kinds of assumptions and preconditions in these verbose plans, which function as safeguards when top management starts complaining that goals have not been achieved (“Well, you knew that could happen, we put it on page 237, section 3, line 5 …”).

An additional advantage is that employees will not read nor understand these, so it will take a lot of time before the department can actually start working on realizing the plan, if ever.

Bad managers only communicate in one way

Bad managers are all capable of holding an open forum for employees to voice concerns, questions, and suggestions. This sounds like the mark of a good manager, right? However, the bad manager only feigns interest in employee feedback, and won’t actually act on what he or she hears. Instead, bad managers stick to their own plans. If people complain, the bad manager will use open forums against the participants, claiming that any incompetency is the fault of everyone.

Bad managers only have eyes for the shareholder

Bad managers know who butters their bread: the shareholder. Therefore, bad managers work diligently on satisfying these shareholders, even it this works to the detriment of the organization’s long-term interests.

Bad managers are real Machiavellians

They have Machiavelli’s book, The Prince from 1513 on their bedside table and turn to it often for advice on how to practice effective “divide and conquer” strategies: manipulating colleagues, employees and bosses. As a result, the targeted members in the organization become preoccupied with guarding their backs instead of focusing on growing the department.

Bad managers have an exit strategy

When the organization is on the verge of holding a bad manager accountable for his or her (in)actions, the bad manager moves on to another organization. In fact, the bad manager had plotted his or her exit strategy for a long time, and always has a fall-back organization where he could flee.

It goes without saying that these ten habits don’t exist in HPOs! But as most organizations are not HPO yet, it is good for you to be able to recognize the signs of bad management. This way you can deal with these ‘bad managers’ quickly…which is, after all, also a characteristic of a HPO manag


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12 Questions That Will Change Your Financial Life

How well do you really know yourself and your relationship with money?

by Matt Topley

Key Takeaways

  • When it comes to your money outlook, you tend to be influenced by the five people you spend the most time with.
  • Commit to being a lifelong learner about personal finance and personal fulfillment. There’s a strong correlation between the two.
  • Don’t let your emotions get in the way of a sound financial plan—or life plan.
  • Be brutally honest with yourself about what’s most important in life. Eliminate distractions that prevent you from putting your energies where they truly belong.

Going through my summer reading pile the other day, I came across a great article by Ryan Holiday, called “12 Questions That Will Change Your Life.” Holiday, author of the best-selling book Ego is the Enemy, wrote 12 Questions for a general audience, but I’ve found they can be applied to investing, wealth accumulation and wealth preservation, too. You don’t have to read these provocative questions in order, but do yourself a favor and give each one some thought:

Q1. Who do you spend your time with? According to motivational speaker and business guru, Jim Rohn, we are the average of the five people we spend the most time with.

It’s been proven time and time again that people are the product of their environment. If you spend your time around people who constantly complain about money, who degrade rich people, who see money as the root of all evil or who will do anything to avoid a conversation about finances, then you’ll have a lower probability of growing your wealth than if you spend your time surrounded by people who have a healthy relationship with money.

That doesn’t mean you have to champion the “Greed is Good” philosophy made famous by Michael Douglas in the 1987 classic “Wall Street.” But, think about your closest friends and colleagues. Do they seem to have a positive relationship with money?  Do they inspire you to grow your net worth and pursue financial freedom by way of example? On the other hand, if your closest friends and colleagues are willing to accept an unhappy financial lifestyle, they will most likely endure an unfulfilling family and work life.

Q2. What does your ideal day look like?  One of the biggest benefits of financial freedom is that you can live your life on your terms—not on someone else’s terms. But if you don’t know what your ideal day looks like (both a workday and a weekend day), then how do you expect to experience it on a regular basis?  It’s important to take inventory of your financial life.  One of the best ways to do that is to spend a few hours a week increasing your financial literacy. It’s not about learning how to be a better stock picker. It’s about learning how to boost your career skills or starting a side business that can substantially boost your income.

Before diving in, it’s important to know how you learn best. Do you learn best by reading, by listening or by watching?  Whichever channels works best for you, spend an hour a day on it building your career skills and financial literacy.  Surely it’s worth devoting 60 minutes a day to something that will lower your stress and increase your pursuit of self-actualization.

READ: Barron’s, Wall Street Journal and Topley’s Top 10 blog.
LISTEN TO: Behind the Markets (Wharton Business Radio) and Barry Ritholtz’s Masters in Business podcast (Bloomberg)

Q3. To Be Or To Do?  Legendary Air Force colonel, John Boyd, used to ask trainees: “To be or to do? Which way will you go?”  Boyd wanted to know if the new recruits would be focused on the pursuit of success or choose to focus on a higher purpose?

The goal of financial freedom is not to acquire big houses, fast cars or expensive bling. It’s about acquiring the freedom of time so you can enjoy life and pursue a higher purpose. Finding a higher purpose takes time and contemplation. If you are just scrambling to pay bills all the time, you are not in a position to be thinking about your higher purpose in life. The stress hormone cortisol is public health enemy No. 1 and research shows that a sizeable percentage of Americans suffer from financial anxiety (see Question 12). Real tangible accomplishments happen only when your thinking is sharp and free of stress and distractions.

Q4. If I Am Not For Me, Who Is?  If I Am Only For Me, Who Am I? The alternative translation of that last part is “If I am only for me, what am I?”  The answer is “the worst.”  It doesn’t make you a bad person to want to be remembered, or climb to the top of your profession, or focus intensely on providing well for yourself and your family.  But, if this is ALL you want from life, then that’s a problem. Many successful people have strong gos and are driven by self-interest, pride, dignity and ambition–but they temper those traits with a sense of humility and selflessness.

Warren Buffett, no stranger to success, said that “Investing is not a game where the guy with the 160 IQ beats the guy with the 130 IQ. Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing.”

I love Buffet’s quote and recently wrote a paper based on it (Investing Is a Psychology Game, Not an IQ Game). If you’re not careful, ego can be your greatest enemy in both investing and in life. Temper your investing life with a sense of humility and simplicity. This will give you the time and money for selflessness. Improving your personal financial life give you the time and money to change the world in a way that is most meaningful to you.

Q5. What Am I Missing By Choosing To Worry or Be Afraid? In his book, The Gift of Fear, Gavin de Becker suggests that when you worry, you should ask yourself: “What am I choosing NOT to see right now?”  What important things am I missing because I choose worry over introspection, alertness or wisdom?”

Obstacles in our financial lives make us emotional. The inability to keep our emotions in check is what often destroys net worth and can lead to fractured personal relationships and stunted careers.

Don’t let the stock market’s fickle gyrations fool you into making bad decisions. Don’t let Wall Street pundits and the financial media scare you with attention grabbing headlines.

When it comes to investing, things are never calm for long. Over the past 70 years, the S&P 500 Index has experienced twelve separate corrections of at least 20 percent. That’s an enormous amount of wealth wiped out in a relatively short time. But despite those frightening reversals, the index has gained a stunning 15,000 percent over that seven-decade time frame. Those who stayed invested and who didn’t try to get in and out of the markets have been handsomely rewarded for their discipline.

Meanwhile the average U.S. investor is barely keeping up with inflation (Sources: Richard Bernstein Advisors LLC, Bloomberg, MSCI, etc.). Why is it so hard for individual investors to keep up with inflation, let alone the unmanaged market index? Because many make emotional decisions at the wrong time—again and again!

The Greek word “apatheia” refers to the equanimity one gains when you are free of irrational fear and extreme emotion. Apatheia is one of the keys to successful investing and paves the way to a state of flow in your personal financial life. A fulfilling life revolves around doing meaningful work and having meaningful relationships. A stressful personal financial situation can destroy your ability to enjoy your work and relationships.

Q6. Am I Doing My Job?  The last thing that legendary college basketball coach, John Wooden, said to his players in the locker room before every game was: “Men, I’ve done my job; the rest is up to you.”

You may not be part of an elite basketball program or Fortune 100 company, but ask yourself if you are really doing your job each and every day? Remember, you can be extremely busy—working to the point of exhaustion–and still not be doing your job. You cannot be the best at your job when you are scrambling to pay the bills, fighting with your spouse over money matters, or envying a co-worker you think is more financially successful than you are. To operate at your highest level for career advancement, you must be in a state of mental flow. This flow state can only be reached when distractions are kept at a minimum. A healthy financial plan will limit distractions from many areas of your life—not just the money ones.

Q7. What Is the Most Important Thing? If you don’t know what the most important thing in life to you is, then how do you know if you’re putting it first? If you have personal financial stress, you will never have time or mental energy to focus on what’s most important to you because you will be constantly distracted by the negative weight of your money burdens. However, once you put your financial house in order, you will develop the quiet confidence to succeed in all aspect of your life. Seneca, the ancient Roman philosopher called that quiet confidence “euthymia”– the belief that you’re on the right path and that you won’t be led astray by people who are hopelessly lost.

Q8. Who Is this for? It doesn’t matter if you’re making something, selling something or trying to reach people, you have to know who your audience is. Great speakers, great politicians and highly creative people tend to have a good sense of who their target audience is. So can you.

Creativity is the key to self-improvement and career growth. In order to be creative you need to generate a LOT of ideas. They won’t all be winners, but you need a clear mind and long periods of uninterrupted thinking time to come up with a diversified portfolio of potential ideas so you can consistently develop good ones. Clearing your mind of financial worries and other distractions is the key to getting into your flow state—a mindset in which you do your best thinking and achieve real breakthroughs.

Q9. Does this Actually Matter? Given the shortness of life, does this thing I’m thinking about, worrying about, fighting about, throwing myself into even matter?  Sadly the answer is usually no.

As Coach Wooden always told his players: “Learn as if you were to live forever; live as if you were to die tomorrow.”

If nothing else, don’t get stressed about short-term market volatility and the media hysteria around it. All that matters is your long term financial plan and preserving wealth for yourself, your family, your heirs and the causes you support. As get older, I realize more and more that money is simply a tool for making the most of our brief time on earth. Making money for the sake of making money’s will just keep you on the hamster wheel forever.

“You could leave life right now,” the second century Roman emperor, Marcus Aurelius reminded himself, “Let that determine what you do and say and think.”

Q10. Will This Be “Alive Time” or “Dead Time?” At the end of the day there are only two types of time: Dead Time and Alive Time. Dead Time is when we are just waiting and Alive Time is when we are learning and active.

Resist the temptation to get distracted by Wall Street pundits. Don’t let them sway you into chasing the next hot stock or sector. Don’t let them talk you into getting in (or out of) the markets at EXACTLY the wrong time (see danger of market timing in Question 5).

Case in point
: During a recent eight-day span, research found that the big three cable news networks had over 600 stock market pundits on the air—that’s about 75 different “talking heads” tugging at your ego and emotions every day. Behavioral finance research proves how hard it is to predict markets accurately, but still we are exposed to thousands of gurus a month through conventional and social media. Use your Alive Time to become a smarter investor, to get better at your profession, to become a better parent, to read and to exercise regularly. Don’t allow your Alive Time to become Dead Time by trying to predict the unpredictable (think weather, stock market, natural disasters or traffic accidents, etc.).

Q11. Is this Who I Want To Be? Our minds have a unique ability to make the distinction between what we do and who we are. The problem is you can’t be a good person if your actions are consistently bad. People make bad decisions when they’re under fiscal duress, often falling into what we call “the triangle of corruption:
Need + Justification + Opportunity.

Unfortunately, sociopaths aside, the triangle is where people get themselves into trouble. By keeping your financial house in order, you can prevent the triangle from swallowing you up. You are what you do. Regardless of what you happen to be doing, always ask yourself, “Is this reflective of the person I want to be?”

Q12. Man’s Search for Meaning. Viktor Frankl, a renowned Austrian neurologist and Holocaust survivor, said life demands that we always answer the question, “What Is the Meaning of Life?” He said we answer that existential question with our actions and decisions.

After examining 65 studies on debt and mental health, researchers from the University of South Hampton concluded that people in debt are three times as likely as those who are debt-free to have a mental health problems. Those problems can range from drug and alcohol dependence, to depression, anxiety disorders and psychotic disorders. That’s a scary statistic considering that more than one-third of Americans have delinquent debt according to the Urban Institute.


Surround yourself with people who have a positive outlook on life and a healthy relationship with money. Control what you can control and let everything else go. Finally, if you are to find the meaning of life in your actions and decisions, then debt and financial worries are clearly things to avoid at all costs.