Topley’s Top Ten (short version) – January 11, 2019

1.Junk Bond Sales Dried Up at End of 2018.

Slack investor demand recently lifted to the highest level in more than two years the premium, or spread, that companies with junk credit ratings must pay over risk-free government debt. The corresponding fall in high-yield bond prices last quarter erased investors’ gains in what had been one of the few bright spots in the bond market in the first nine months of 2018.

Junk-rated companies haven’t been completely absent from the debt markets. Issuance of so-called leveraged loans totaled $25 billion in November and December, according to LCD, a unit of S&P Global Market Intelligence. But that was still a significant slowdown from prior months.

Junk-Bond Sale Ends 40-Day Market Drought

Deal follows record dry spell that began in November, suggesting an improving corporate-debt market

Daniel Kruger and Sam Goldfarb

2.S&P Low Volatility Index vs. S&P 15 Years.

Here’s a 15-year chart comparing the two:

Opinion: These three ETFs have beaten S&P indexes while cutting risk

3.Volatility in 2018 Based on VIX Does Not Even Make Top Half of Rankings.

Yearly Average VIX Reading

Since they mentioned the VIX, I figured let me do the easy thing and simply take the average VIX reading for each year.  Well 2018 does not even make the top half. So clearly that is not it.


Found at Abnormal Returns Blog








4.Global Valuations by Sector Based on 12 Month Forward P/E

Blackrock Blog

Cyclicals looks cheap, defensives less so.

Looking at valuations both on an absolute level and relative to history, the cheapest sectors are financials, energy, materials, industrials and consumer discretionary (see Chart 1). Real estate, consumer staples and healthcare show up as the most expensive. Interestingly, not only are the defensive sectors expensive on an absolute basis, but in the case of real estate and healthcare they are still trading slightly above their 10-year average. The takeaway: With evidence growing that the economy is slowing, investors have been willing to pay up for names perceived as less economically sensitive.

5.Can the Economy Handle Current Rates?

Posted by lplresearch

We’ve been hearing a lot of debate recently about the U.S. economy’s ability to withstand rising interest rates.

However, as shown in the LPL Chart of the Day, current interest rates are historically low relative to the robust output growth we’ve seen recently, proving that the Federal Reserve’s (Fed) path of increasing interest rates isn’t unusually cavalier given economic strength.

Nominal gross domestic product (GDP), or GDP without removing the inflation component, grew 5.5% year over year through the end of the third quarter, the fastest pace since the third quarter of 2006. In contrast, the fed funds rate was 2.25% on the upper end at the end of the quarter, for a spread of 3.25%. Since the end of 1970, the spread between nominal GDP growth and the upper bound Fed funds rate has been about 1.2%, signaling that the Fed still has ample room for hikes based on output growth.

Can the Economy Handle Current Rates?

Posted by lplresearch

6.Average Size of Single Family Home Drifts Lower.

The Daily Shot

 7.California pot taxes lag as illegal market flourishes

By MICHAEL R. BLOODyesterday

LOS ANGELES (AP) — Deep in Gov. Gavin Newsom’s new budget is a figure that says a lot about California’s shaky legal marijuana market: The state is expecting a lot less cash from cannabis taxes.

The Democrat’s proposed spending plan, released Thursday, projects the state will bank $355 million in marijuana excise taxes by the end of June. That’s roughly half of what was once expected after broad legal sales kicked off last year.

Industry experts say the diminished tax income reflects a somber reality: Most consumers are continuing to purchase pot in the illegal marketplace, where they avoid taxes that can near 50 percent in some communities.

Tax collections are expected to gradually increase over time, but predicting what that amount will be remains something of a guess.

Tax collections for “a newly created market are subject to significant uncertainty,” the budget said.

Josh Drayton of the California Cannabis Industry Association credited Newsom with taking “a realistic look at the challenges” after a bumpy first year of broad legal sales.

Newsom also recommended a sharp increase in spending for regulatory programs, although it’s an open question whether it will be enough to help steady the state pot economy. The budget recommends just over $200 million for marijuana-related activities in the fiscal year that starts July 1, which would be over a 50 percent boost from the current year.

Initially “the state was too optimistic about how the implementation of legalization was going to work. This governor has paid attention to that,” Drayton said.

That said, Drayton added that legal businesses need a break from hefty tax rates that are driving consumers to the illicit economy. Various proposals have been made to cut state pot taxes.

State taxes include a 15 percent levy on purchases of all cannabis and cannabis products, including medical pot. Local governments are free to slap on taxes on sales and growing too, which has created a confusing patchwork of tax rates around the state.

The state’s top marijuana regulator, Lori Ajax, has said the state intends to get more businesses licensed and operating in 2019, while cracking down on rogue operators who continue to proliferate across the state.

At year’s end, California’s effort to transform its longstanding illegal and medicinal marijuana markets into a unified, multibillion-dollar industry remained a work in progress. By some estimates, up to 80 percent of sales in the state remain under the table, snatching profits from legal storefronts.

Drayton said more than half the municipalities in the state do not have laws governing the industry. That means pot businesses cannot locate there, since companies are required to have a local license before seeking one from the state.

The budget also includes an additional $2.9 million for the California Department of Tax and Fee Administration to help chase down tax cheats.

Meanwhile, the courts budget includes nearly $14 million for resentencing of thousands of drug offenders whose offenses are no longer crimes since California legalized recreational pot.

Newsom, an advocate for legalized marijuana, said it has long been expected the new market would take five to seven years to settle in, with twists and turns along the way.

The issues he intends to look at include the distribution pipeline and claims that local governments are gouging the industry.

The state will “move expeditiously at licensing more and more dispensaries, making sure we go after the bad actors,” he said.


Associated Press writers Don Thompson and Kathleen Ronayne in Sacramento contributed to this report.

8.How to Be Successful in Life in 6 Steps

The Habits of Successful People

By Kendra Cherry

How do we define success? There are many different tactics for how to be successful in life, but the strategy that works best for you may depend on your view of success itself. We often think of it as doing well at work or earning a high salary. While professional accomplishments can be one piece of the puzzle, it leaves out many other important areas of life. Family, romantic relationships, academics, and athletics are just a few areas where people may strive for success.

Your individual definition of what success is exactly may vary, but many might define it as being fulfilled, happy, safe, healthy, and loved. It is the ability to reach your goals in life, whatever those goals may be.

So what can you do to boost your chances of achieving these things? What are some of the habits of successful people?

There is no single right way to be successful. What works for you might not work for someone else. There may not be a perfect combination of ingredients that can guarantee success, but there are some basic steps you can follow that can improve your chances of being successful in life, love, work, or whatever happens to be important to you.

Build a Growth Mindset

Research by psychologist Carol Dweck suggests that there are two basic mindsets that influence how people think about themselves and their abilities: the fixed mindset and the growth mindset. People who possess a fixed mindset believe that things such as intelligence are static and unchangeable.

Those with a fixed mindset believe that success isn’t a result of hard work—it’s simply a consequence of innate talents. Because they believe that such talents are something people are either born with or without, they tend to give up more easily in the face of a challenge. They quit when things do not come easily because they believe that they lack the inborn skill needed to excel.

Those who have a growth mindset, on the other hand, feel that they can change, grow, and learn through effort. People who believe that they are capable of growth are more likely to achieve success. When things get tough, they look for ways to improve their skills and keep working toward success.

What can you do to build a growth mindset?

  • Believe that your efforts matter.Rather than thinking their abilities are fixed or stuck, people who have a growth mindset believe that effort and hard work can lead to meaningful growth.
  • Learn new skills.When faced with a challenge, they look for ways to develop the knowledge and skills that they need to overcome and triumph.
  • View failures as learning experiences.People with growth mindsets don’t believe that failure is a reflection of their abilities. Instead, they view it as a valuable source of experience from which they can learn and improve upon. “That didn’t work,” they might think, “so this time I’ll try something a little different.”

Improve Your Emotional Intelligence

Overall intelligence has long been believed to be one factor contributing to success in different areas of life, but some experts suggest that emotionalintelligence may actually matter even more. Emotional intelligence refers to the ability to understand, utilize, and reason with emotions. Emotionally intelligent people are able to understand not only their own emotions, but those of others as well.

Some tactics for improving your emotional intelligence include:

  • Paying attention to your own emotions.Focus on identifying what you are feeling and what is causing those feelings.
  • Managing your emotions.Step back and try to view things with an impartial eye. Avoid bottling up or repressing your feelings, but look for healthy and appropriate ways of dealing with what you are feeling.
  • Listening to others.This not only involves hearing what they are saying, but also paying attention to nonverbal signals and body language.

Develop Mental Toughness

Mental toughness refers to the resilience that some people have to carry on and continue trying even in the face of obstacles. People who possess this mental strength see challenges as opportunities. They also feel that they have control over their own destiny, are confident in their abilities to succeed, and are committed to finishing what they start.

So what can you do to improve your mental toughness and increase your chances of being successful in life?

  • Believe in yourself.Cut out the negative self-talk and look for ways to stay positive and self-encouraging.
  • Keeping trying.Even when things seem impossible or setbacks keep holding you back, focus on ways that you can develop your skills and keep soldiering forward. One of the key habits of successful people is to always look at setbacks or failures as learning opportunities.
  • Set goals.Mentally tough people know that in order to achieve, they need to start by having attainable goals. These goals are not necessarily easy to reach, but by having something to aim for, you will be better able to move forward and overcome obstacles.
  • Find support.Doing things alone can be difficult, but having a strong support system can make things easier. Mentors, friends, co-workers, and family members can cheer you one when things get tough, and even offer advice and assistance that can help you improve your chances for success.

Strengthen Your Willpower

In the world’s longest running longitudinal study, psychologists began looking at a group of children who were identified by their teachers as highly intelligent. As they compared how these subjects fared throughout childhood and into adulthood, researchers found that those who ultimately were the most successful in life shared some key characteristics that less successful individuals often did not, including perseverance and willpower.

These characteristics tend to be part of an individual’s overall personality, but they are also something you can improve. Delayed gratification, learning to persist in the face of challenges, and waiting for the rewards of your hard work can often be the key to success in life.

So what are some strategies you can use to improve your willpower?

  • Try distracting yourself.For example, if you are trying to lose weight but are having a difficult time staying away from your favorite snacks, distracting yourself during your moments of weakness can be an effective way to avoid giving in to temptation.
  • Willpower is something you can build, but it takes time and effort. Start by making small goals that require will power to achieve, such as avoiding sugary snacks. As you build your ability to use your will power to achieve such small goals, you may find that your willpower is also stronger when working on much larger goals.

Focus on Intrinsic Motivations

What is it that motivates you the most? Do you find that the promise of external rewards keeps you reaching for your goals, or is it the more personal, intrinsic motivators that keep you feeling inspired?

While extrinsic rewards such as money, awards, and other external motivators can be helpful, many people find that they are most motivated when they are doing things for personal satisfaction.

If you are doing things because you enjoy them, because you find them meaningful, or because you enjoy seeing the effects of your work, then you are driven by intrinsic motivations. Research has shown that while incentives can be a better predictor of some types of performance, intrinsic motivators tend to be better at predicting performance quality.

So what can you do to boost your sense of intrinsic motivation?

  • Challenge yourself.People often find that pursuing a goal that is achievable, but not necessarily easy, is a great way to increase motivation to succeed. Challenges can keep you interested in a task, improve your self-esteem, and offer feedback on areas you can improve on.
  • Stay curious.Look for things that grab your attention and that you would like to learn more about.
  • Take control.It can be difficult to stay intrinsically motivated to pursue a goal if you don’t feel that you have any real influence over the outcome. Look for ways that you can take an active role.
  • Don’t fear competition.There might be other people out their trying to reach the same goals as you, but this doesn’t mean that you should give up. It gives you something to compare your efforts to, and can even help inspire you to keep doing better.

Nurture Traits Linked to High Potential

Psychologists have long attempted to link specific traits or personality characteristics to success in life and work. The Myers-Briggs Type Indicator (MBTI) is one widely used assessment that is often utilized by businesses to screen job candidates. The problem, however, is that research often fails to show that the MBTI actually correlates to performance.

According to some more recent research, there are certain traits that tend to be consistently tied to success.

Researchers Ian MacRae and Adrian Furnham have identified six key traits that can play a role in how well people do at work. However, they note that there are optimal levels of these traits. Too little of these characteristics can hinder success, but so can having too much.

If you are trying to learn how to be successful in life, consider what you can do to nurture these key traits:

Conscientiousness: Conscientious people consider the effects of their actions. They also consider how other people will react and feel.

You can nurture this trait by:

  • Thinking about the consequences of actions
  • Considering others people’s perspectives

Accepting of Ambiguity: Life is full of situations that are not always clear. People with a great deal of potential for success are better able to accept this ambiguity. Rather than being rigid and inflexible, they are ready to adapt when the unexpected comes their way.

You can learn to embrace ambiguity by:

  • Challenging your perspectives and considering opinions and ideas other than your own
  • Not fearing the unfamiliar
  • Being willing to change
  • Valuing diversity

Capable of Adjustment: In addition to being able to accept ambiguity, success often hinges on the ability to quickly adjust to change. Some ways that you can nurture this ability to adjust:

  • Try reframing difficult situations. Seeing them as opportunities to learn and grow rather than simply obstacles to live through can help people adapt and recover faster.
  • Be open to change. If you find yourself getting stressed out when plans or situations change, step back and look at ways to cope.

Courageous: If you want to know how to be successful in life, look at the characteristics of the world’s most successful people. One thing you might quickly find is that they often exemplify great courage. They are willing to take risks, even in the face of potential failure.

So what can you do to improve your tolerance of risk?

  • Utilize positive thinking. Research suggests that courageous people utilize positive emotions to overcome fear. So when you find yourself avoiding situations out of fear, look for ways to quell negative emotions by focusing on more positive feelings.
  • Balance risk with common sense. Remember, however, that being tootolerant of risk can be a bad thing. High-risk can lead to high-reward, but being cautious and pragmatic can also pay off depending upon the situation and what’s at stake.

Curiosity: People who are successful tend to be curious about the world around them. They are always eager to learn more, including new knowledge and skills.

You can cultivate your sense of curiosity by:

  • Relating tasks to your interests. You might find filing paperwork boring, for example, but looking for a more efficient way to categorize the information might play to your strengths as an organizer.
  • Learning new things. Even if you feel that you are an expert on a topic, there are always new things to discover and skills that can be improved or refined.

Competitiveness: Successful people are able to utilize competition to motivate, but avoid falling prey to jealousy.

You can nurture a healthy sense of competition by:

  • Focus on your own improvements. Rather than worry about being the best at something, pay attention to your progress. Note how far you’ve come and things you can do to improve even further.
  • Be happy when others succeed. Don’t give in to jealousy. Instead, focus on feeling genuinely glad when others do well and use to help inspire you to be successful in your own life.

There are some important things to remember when considering these traits that are connected to high potential for success. First, some personality traits and types may be better suited for certain jobs than others. However, no specific personality trait can guarantee success, nor can being low in that trait doom someone to failure. While there are differences in opinion on just how much personality can be altered, nurturing some of these high potential traits might help you develop skills that can serve you well in many different aspects of your life.

A Word From Very well

There is no single measure of success, and certainly no single answer for how to be successful in life. Yet by looking at some of the habits of successful people, you can learn new tactics and strategies that can implement in your own daily life. Cultivate and nurture these abilities and over time you may find that you are better able to reach your goals and achieve the success you want in life.