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Avion Wealth

Will the SECURE Act Upend Your Retirement Savings?

Congress loves its acronyms. The SECURE Act—Setting Every Community Up for Retirement Act. Did they pay someone to come up with this? I'm getting a lot of pings on this law. Will the SECURE Act upend your retirement savings?There're a lot of articles out there catastrophizing. They're making a big deal out of certain provisions. This is not an overhaul of the American retirement system. It's mostly a tweak. And most of the tweaks will benefit most Americans. Let's briefly summarize those provisions that affect your retirement security and the wild card in the bill, the elimination of the inherited IRA stretch provisions. One of the biggest things is they've changed the required minimum distribution date, the date at which you must start taking withdrawals from your IRA, from 70 ½ to 72. Now, this is not a long stretch. This is 18 months. But it will permit more flexibility...
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Does the Inverted Yield Curve Signal a Recession?

The U.S. Treasury yield curve has stayed inverted for nearly eight weeks, and briefly nudged back into the positive territory on Friday. How does this affect your portfolio and the outlook of the economy? As of Monday, the three month treasury bill still sits above the 10-year note yield by seven basis points. While the difference between the short-term maturity and the 10-year yield has narrowed since May 22nd, we are still experiencing an inversion of the yield curve. Now the question is: does the inversion signal a recession? Over the last nine recessions since World War II, investors followed the yield curve closely as an inversion of that spread has historically preceded a recession. However, it is not just about whether the curve is inverted, it is also about how long the curve inverts. The length of time that the short-term yields remain above the long-term returns is worth...
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A Divided Fed Holds the Line on Interest Rate Cuts

A divided Fed holds the line on interest rate cuts. How does this affect you in your portfolio? June 19: The Federal Open Market Committee met this afternoon, and they lowered their inflation forecast to just 1.8%. That’s about as close to the sweet spot as an economy can get. All eyes were on the Fed, however, to see how they responded to the European Central Bank’s decision to lower their interest rates. And in what is a thumbs-up for Fed independence, by a nine-to-one decision the Fed decided to hold the line on interest rates, while noting that it’s very possible in the next 12 months that they would be dropped by maybe a quarter of a percent. So there are two threads going on here that are important to you as an investor. First and foremost is the issue of Fed independence. As the president makes thinly veiled...
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Anadarko Employees – Options and Choices

As we know, Occidental is purchasing Anadarko. And ever since the purchase has been announced, their stock has been pummeled. In fact, June 5th, the stock dropped a full 4%. What's going on here? I mean there's nothing wrong with Anadarko. What's going on here is leverage. Occidental is using an enormous amount of leverage to make this deal happen. We actually had a video about a week or two ago where we discussed some of the components of this deal. But, long story short, Occidental is going to be under intense pressure to sell assets. They've already got assets for sale in Africa to Total Energy out of France. They're probably going to have to sell those towers. They've got to get the debt under control. So where does that leave the employees? Well, unless you're out in the Permian Basin or there's something unique about your skillset, you're...
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Occidental wins Anadarko… is it the end?

With Occidental’s successful offer for Anadarko, what are we to expect for both the employees of Anadarko and The Woodlands? Hello, my name is Paul Carroll. I'm the CEO and founder of Efficient Wealth Management, a boutique wealth management firm based in The Woodlands, Texas, and Austin, Texas. Occidental has become the winner of quite the bidding contest. Paying $38 billion for Anadarko. Anadarko is the number one private employer in The Woodlands, Texas. With 3,700 mostly well-paid jobs there, employ two times as many people as ExxonMobil does within The Woodlands. What we're seeing here is part of an industry consolidation, the asset plays out in Texas of becoming mature. Now there is this drive for efficiency and assets. And Occidental and Chevron both wanted those assets, but there was a difference. Chevron didn't need them like Occidental does. To become a real player, to not be a has...
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Inverted Yield Curve

Now that the three-month treasury yield is greater than the 10-year treasury yield, we have what's known as an inverted yield curve. The question, when does this reliably predict a recession? Hello, my name is Paul Carroll. I'm the CEO and Founder of Efficient Wealth Management, a boutique wealth management firm in South Texas. Now, ominously, an inverted yield curve has predicted every recession back to the late '60s, but there are some caveats to this. First, the prediction has been as far as two years in advance that's not very helpful, and, two, for the prediction to be reliable, it needs to be inverted. The yield curve needs to be inverted at least for 90 days, a full quarter. Now, that clock started a little over two weeks ago which means it won't be till late June if we know if we have a reliable predictor for a 2020...
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Did the Fed say that?!

Are we living in an era of low interest rates, and if so, how is that going to affect you as an investor or a retiree? Hello, my name is Paul Carroll. I'm the CEO and founder of Efficient Wealth Management, a boutique wealth management first in south Texas. Now fed chair, Jerome Powell, at the most recent fed meeting, had a subtle message that I think a lot of people missed, and that is interest rates, in his opinion, have reached equilibrium. You're thinking so what. Well, globally we're in an era of low rates. Inflation, generally speaking, is tamed. There are demographic challenges that I've talked about previously. Today the fed funds rate is 2 1/4%. The 20-year fed bond rate is 2.9%. Inflation is just 1.6%. Real returns on risk-free bonds are less than one-half of a percent. This is a new normal according to the fed....
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2018 – A Wild Ride. 2019 – A Great Start

2018 was quite the wild ride. The worst year in 10 years. 2019 is the best January since 1987, the year I graduated from Texas A&M. What's going on? Hello, my name is Paul Carroll. I'm the CEO and founder of Efficient Wealth Management. In 2018, the wild ride took us first on a down slope with international stocks. Then we saw interest rates going up, coming back down, resulting in varying degrees of bond volatility. We had a strong dollar. It didn't matter what you did. Whenever you have a strong dollar, you herd commodities, you make it difficult for foreign countries to buy your raw material, you improve imports, you reduce exports, and no political agenda can change that reality. And finally the yield curve. It kept promising to go inverted. It got very flat. A five year bond and a 30 year bond paid almost the same...
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2019 Portfolio Modifications

2019 offers us a new year and a new investment landscape. Let me briefly describe some of the portfolio modifications that we're going to implement here at Efficient Wealth Management. Hi. My name's Paul Carroll. I'm the CEO and Founder of Efficient Wealth Management. In 2018, we saw a series of negative market events starting with emerging markets at the end of the first quarter. Developed markets followed them down. Domestic markets, not including the "FAANGs" were flat for most of last year. The FAANGs pulled the index up, and then at the last quarter of the year it pulled it all the way back down again. Finally, I mean we were putting out videos and memos about this all year last year. Global REITs actually managed the year quite well. Domestic REITs got hit a little bit hard. International REITs survived. They're a little bit of a hedge against...
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Rate Hikes – Good or Bad?

Rate hikes on the QT. Is this good or bad? Hello, my name is Paul Carroll. I'm the CEO and founder of Efficient Wealth Management, a boutique wealth management firm in South Texas. Fed Chairman Powell announced a quarter percent rate hike yesterday with new band of 2.25 to 2.50%. As a result, domestic and global stock markets tumbled. Was this unavoidable? From a market point of view, valuations over time, are the net present value of future income streams discounted by long term interest rates. You raise interest rates, you see markets tumble. But was this appropriate? Is the market too hot? Only hindsight will tell us and when I say the market, I really mean the economy. The labor market. The labor market is very strong right now. It is slowing down but is it slowing enough? One of the important lessons that has faded into history is...
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