Here’s a Graphic Overview of the process to properly IMPLEMENT A ROTH LADDER CONVERSION!

A look back at the past six weeks from our Top Portfolio Management Company, Cabana Asset Management:

September 30: We noted continued mixed messages in the market. While markets saw selling and we were in a technical manufacturing recession, jobs numbers were strong, the yield curve was improving, and we were only 2% below all-time highs in the major indexes. We called the glass “half full” and commented that dividend payers, defensive equities and real estate were attractive. Shortly after this commentary our algorithm signaled a reallocation to less risky assets.

October 7: We felt that the jury was still out and explained that the previous six months of rangebound volatility would result in the market giving us a “verdict”. We were looking for a breakout above or below the range and provided the levels on the S&P 500 that we were watching (2720 and 3000).

October 14: We suggested that the “news” doesn’t matter. What does matter is interest rates, earnings and price. We noted that earnings would ultimately carry the day and were looking forward to the beginning of earnings season the following morning.  October 18: Our algorithm signaled a reallocation to more bullish conditions. This was primarily due to changes in price of the broad markets, as well as initial earnings reports that had come in over the previous three days. Our algorithm observed that things were “better” and that we should reallocate to assets that outperform in a “better” market environment. We began the process of reallocating our portfolios and notified our advisor partners.

October 21: We noted stellar earnings reports from financial institutions and outperformance in the transportation sector. At that point, the yield curve had maintained a better spread between short- and long-term interest rates. We also pointed out that equity markets were right at all-time highs and we were watching for a breakout and fourth quarter rally.

October 28: The breakout above 3000 on the S&P 500 had occurred. We identified rotation into higher beta assets as further evidence that professional investors were reallocating in response to growth prospects improving. We were watching for buying in energy, commodities and transportation. As soon as we said it, that’s what occurred.

November 4: We pointed out that the fourth quarter rally was officially on us, and were watching for outperformance in risk assets like small caps, emerging markets and industrials in order to continue.

November 6: We provided a chart visually showing positive money rotation into risk assets and out of defensive positions during October and early November.

November 11: We discussed the rally and what to expect going forward. We highlighted improvements in global markets and how that could provide support to our market going forward. Lastly, we talked about how markets are forward looking and how that coincides with the performance we saw in 2018 and this year.

What’s happening now? As of today, 92% of companies have reported earnings. Of those, 75% have beaten estimates and 60% have reported positive sales surprises. Year-over-year earnings growth is 9%. The 10-year Treasury is at 1.81%, up from 1.55% at the beginning of September. The spread between the 10-year and 2-year Treasury has increased 20 basis points during that time. These fundamental data points are what matters and is what is driving the rally we are currently seeing in equity markets. It is also what dictated our decision to reallocate to more bullish conditions on October 18, when price improved. Since then the market has rallied almost 5%. While price had not officially broken out on October 18, things underneath the hood were getting better. Things that matter like interest rate spread and earnings. Those factors increased the chances that the improvement in price was meaningful and that