RIA Assets Grow, but Profits Decline

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Hiring by registered investment advisors (RIA's) has stepped up and profits have decreased.

With all that is going on in the markets, I think it is pointing to a relative economic peak.  While not a perfect measure, economically we are very much closer to the top than the bottom.

Econ 101 -  Classic signs of an economic peak

  • Yield curve has steadily shifted up.  The short end has been moving up for some time now.  
  • M&A activity is robust. ATT and Time Warner; Comcast, Disney and Fox
  • Unemployment is at an all-time low. Hiring peaks at the end of the cycle.
  • Inflation is moving up
  • Profit margins in general have peaked and are the downside.  Different businesses have different cycles but, on average, margins are contracting.
  • The market always leads the economy and it is down since the January peak
  • The average consumer is on the high end of their debt capacity. 75% of GNP is driven by the consumer segment.
  • Car sales have peaked and are tailing off.

Being an equity guy, I am always invested.  But, I am only adding very limited positions which I think pose significant LT value. And.....I am mentally preparing for the downside of the probability curve. In up markets, many forget that there are two sides of the probability curve.

I am also growing my cash position and keeping a shopping list.  

I would rather watch someone else do the "high wire act".  Me, I like to stay on the ground and live for another day.

Copyright 2017 Mark T. McLaren