Archieves

Archieves

The Stock Market's Best Six Months of the Year

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Buy in November, Six Months to Remember

These are the U.S. stock market's best six months of the year. You may have heard the old adage, "Sell in May and Go Away", but how about "Buy in November, Six Months to Remember"

Even Wyclef Jean realised you work the summer months then let your money work for you from November to April.

"Every time I make a run, girl, you turn around and cry
I ask myself why, oh why
See, you must understand, I can't work a 9 to 5
So I'll be gone 'til November"

The Money Pouch's Momentum Investment Strategies

All of our strategies have been up in 3 of the last 4 months and we are starting to get into the "money making season" for the U.S. stock market. September is looking pretty flat, which is expected for this time of the year. But, November, December, January, February, March and April are historically the best months of the year for the U.S. stock market and I don't see any major reasons why US equities won't perform well despite high valuations, except in a "Black Swan" event.

The US Stock Market Looks Strong

The economic conditions look OK in the US. Unemployment is steady at around 4%, see the chart below from the Bureau or Labour of Statistics (BLS). 

 

unemployment-statistics-usa

Consumer sentiment is at the highest rate iit's been in 13 years and consumer sentiment is also high. Business sentiment is also up 20% and you can see in these charts, in recessions, business sentiment falls to below 0%. 

Inflation expectations are stable and low at around 3%.

Eating out, retail restauarant sales is also particularly strong. The Dynamic Food & Beverage ETF is holding steady and the leisure & entertainment ETF is doing well. 

Yes, stock valuations are high, by most indicators including the Shiller PE Ratio and Tobin's Q.

However, in the business cycle, the market is looking healthy and with the 4th industrial revolution with new technology and blokchain reducing costs for companies, it looks positive from the point of view of the U.S. stock market.

So, what are the negative indicators?

  1. Credit crunch - Whilst we are in a good stage of the business cycle, it is in the downturn of the credit cycle as Edward Harrison points out in this excellent article. Credit is tightening and Quantative Tightening (QT) is coming into effect, meaning US interest rates are rising and the US government is reducing their purchases of bonds.
  2. Housing - Interest rates are rising which means that mortgages are becoming more expensive. US house prices are also very high. 
  3. Trump's Trade war with China - This obviously has a negative effect on the economy and US exports. Future policy and increased tariffs will have a negative effect on the markets.
  4. Real Economy - whilst the US stock market is looking strong, the actual economy is looking weak with the labour force participation rate not recovering as jobs are lost overseas.
  5. US Household Debt - This is now at over $13 trillion with ongoing growth in home, auto, student and credit loans, although delinquency rates are stabilising.
  6. Black swan event - Something unforeseen. 

Where Not to Invest

Emerging markets are taking a hit from the trade war fall out with China and high interest rates in USD. Most emerging markets own US treasuries, so when US interest rates go up, their government debt, which is in USD, also goes up and their currencies & stock markets weaken.

Best Six Months of the Year for US Equities

Investing in US equities between November 1st and April 30th each year and then switching into fixed income for the other six months of the year has produced reliable returns with reduced risk since 1950.

Yes, this is a 68 year old proven method!  If you back test this strategy since 1950 with an initial investment of $10,000 in the DOW, you would have had gains of 6,740%!

How to Invest Successfully on Auto Pilot with The Money Pouch

We actually improve on these returns using various methods, such as momentum, adding foreign stocks, bond ETFs, gold ETFs and the ability to sit in cash.

Our opinions don't really matter though, the strategies will automatically reallocate to where the hot money flows are, whether that is to be in US equities, in bonds, gold or cash. That is the beauty of momentum strategies. 

Your investment portfolio will automatically be hedged and rebalanced usually once per month. 

Click here to see the historical performance of our investment strategies and the new momentum ETF strategies.

Our strategies are now available in most countries worldwide in USD, GBP and EUR. Please click here for a list of countries we accept


Automated Stock Trading for Americans Living Abroad

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Americans Living Abroad

In this article, we will show how Americans living abroad can make their lives more easy and build up an investment portfolio which trades on Auto Pilot using the free stock trading app from The Money Pouch.

Download the free stock trading app on Google Play

Download the free stock trading app on on iTunes

These apps are only available if you are not a U.S. tax resident. You need to be living abroad on a permanent basis. You can see more about the countries and residents we accept here.

Why are Americans Choosing to Live Overseas?

  1. Tax - you can set up your finances in a way which reduces taxation (see below)
  2. Medical insurance - health insurance costs in the USA are at least double their European counterparts. It can be very, very cheap if you set up a public health insurance card in many countries
  3. Employment opportunities
  4. Seeking a new start
  5. Seeing new friends/partners
  6. Weather
  7. Cheaper cost of living
  8. Broaden your horizons
  9. Challenge yourself
  10. Learn new languages/cultures

Where are Americans Choosing to Live Overseas?

Here is a list of places in Forbes magazine suggested for Americans going to work overseas.

  1. Lisbon, Portugal
  2. Cali, Colombia
  3. Santo Domingo, Dominican Republic
  4. San Pedro, Ambergris Caye, Belize
  5. Saint-Chinian, France
  6. Abruzzo, Italy
  7. Ljubljana, Slovenia
  8. Playa del Carmen, Mexico
  9. Bali, Indonesia 
  10. Da Nang, Vietnam

Some noticeable absentees on that list: Thailand, Malaysia, Ecuador, Chile, Cuba, Panama, Greece & Malta

Americans who wish to retire abroad can live in any of these places for $1,000 to $2,000 per month.

More information in this Forbes article and Internations poll.

American Expats by Country

Here is a list of the American Diaspora. Here are the top 10 countries where American expats live abroad. You can see the full list here along with a description of the estimates.

Mexico <1,000,000
Canada <1,000,000
Germany 324,000
Philippines 220,000–600,000
Israel 200,000
United Kingdom <200,000
Puerto Rico 189,000
Costa Rica 130,000
South Korea 120,000
France 100,000
China 71,493

Automated Stock Trading Account for American Citizens Abroad

American citizens living abroad can take advantage of their new overseas residence to set up an automated stock trading account. Download the free apps on The Money Pouch's website to set up a free stock trading account today.

The free personal wealth management app will automatically buy stock, bond & gold ETFs every month on your behalf. The investment portfolio even has the ability to sit in cash if stock markets start falling. 

Watch the video below to learn how to set up a free account.

Click here to learn more about automated trading and algorithmic trading.

 

Tax for American Citizens Living Abroad

There are a number of ways to mitigate tax if your are an American citizen abroad. But, you must be tax resident abroad. You cannot live in the US and just visit another country on holiday. You must be tax resident abroad.

Unfortunately, many American citizens living abroad get many headached from all the paperwork that the IRS make you fill in. Don't fall into that trap, there are a number of cheap services online that can do the job for you (see below).

It can be very challenging to set up a bank account abroad or an international stock trading account, but The Money Pouch can take care of that for you.

American Citizens Abroad - Tax Structures

Here are some simple structures you can use to reduce taxation or eliminate various taxes in the USA.

  • Set up a US company to hold your investment portfolio
  • Set up an offshore trust or foundation to hold your investment portfolio

These structures should really only be considered for investment accounts over $100,000 as there are set up costs and annual costs to set up these structures. The cost is usually about $3,000 to set up a trust.

You could consider setting up an offshore trust to protect your assets from U.S. taxes on death. The most efficient way presently, is to set up a Panama trust or foundation.

Why set up a Panama Trust?

A Panama trust or foundation is one of the most effective ways to protect your assets from court seizure and avoid any taxes on death. You can name your heirs and decides who gets what upon death.

You can set up a Panama trust in one day. It will then take a few weeks to issue all the documents and get everything legal.

What are the benefits of a Panama Trust?

• Protect Foreign Spouses/Partners: Foreigners can set up trusts with foreign beneficiaries and assets in other countries. For example, you can set up a Panama trust to hold an Interactive Brokers account to trade US ETFs with The Money Pouch’s automated trading system and upon death, the trust distributes assets tax-free to a spouse or partner.

• Confidential: The law penalizes anyone associated with a Panama trust who discloses confidential information without a court order and is punishable by 6 months imprisonment.

• Privacy: Since trusts are not registered with the government in Panama, the identity of the settlor, beneficiaries and assets are never included in public records.

• No Taxation: All assets located outside of Panama producing income or distributed to beneficiaries are completely tax-free. However, U.S. taxpayers and anyone paying taxes on global income must disclose the income to their governments.

• Estate Planning: Trusts can have perpetual life for generations of heirs to enjoy.

• Asset Protection: All assets are protected from the settlor’s creditors and beneficiaries’ creditors.

• Fast Formation: A trust can be formed in one day.

New Foreign Earned Income Exclusion (FEIE) Law

Now for some good news for US citizens living abroad who still own a home in the USA.

The IRS recently announced (August 24th) a new law that allows US citizens and resident aliens, notably contractors or employees supporting the US Armed Forces in designated combat zones, to qualify for the Foreign Earned Income Exclusion (FEIE). In February of this year, the Bipartisan Budget Act of 2018, changed the tax home requirement for eligible taxpayers, allowing them to claim the FEIE even if their “adobe, or home, is in the United States.

Help for Americans Living Abroad

Here are some helpful sites for Americans living abroad:

Americans Abroad (@ACAVoice) | Twitter

America Abroad (@America_Abroad) | Twitter

1040 Abroad (@1040abroad) | Twitter

Greenback Expat Tax Services

The US Expat Community

Gringos Abroad

American Citizens Abroad News

New Tax Headache for Americans Abroad

 

 


Complete Account Set Up

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Account Set Up Issues

This month (September 2018), we have over 240 pending applications, i.e. accounts not verified or set up yet.

The majoity of clients have filled in most of the documents required, but each country/jurisdiction has its own regulations and rules which may require additional documentation.

EACH APPLICATION IS UNIQUE and MAY REQUIRE ADDITIONAL DOCUMENTS

You will need to log back into you Interactive Brokers account with your username and account number to complete any additional documents that IB asks for.

e.g. Account Number    U0000000     
    Account Username    testin000

Please login to here to complete your documentation

https://www.clientam.com/sso/Login?partnerID=hudson 

Call Us

If you are still having issues setting up your account, you will need to phone Interactive Brokers to complete your account set up.

Please clck here, phone the Money Pouch to set up my IB account


Interactive Brokers Phone Number for The Money Pouch

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Phone Number to Complete The Money Pouch Account Set Up

If you are having issues setting up your Money Pouch account with Interactive Brokers, 

Please phone the number below and when asked, press 4 on your phone for "Account Configuration, Statements, Fees, Corporate Actions & General Assistance" and then press 1 for "Account Configuration".

Calls to Interactive Brokers' Service Desks may be recorded for quality control purposes. We suggest using the Direct Dial numbers below to get through more quickly.

Location Phone Number Hours of Operation in Asia
United States 1 (877) 442-2757 Toll free
1 (312) 542-6901 Direct dial
19:00 (Mon - Fri) - 07:00 (Tue - Sat) (Asia/Jakarta)
00:00 (Mon) - 06:00 (Mon) (Asia/Jakarta)
Canada 1 (877) 745-4222 Toll free
1 (514) 847-3499 Direct dial
19:00 (Mon - Fri) - 04:30 (Tue - Sat) (Asia/Jakarta)
Europe 00800-42-276537 Toll free
+41-41-726-9500 Direct dial

+44 207-710-5695 Direct dial United Kingdom
14:00 - 23:00 (Mon - Fri) (Asia/Jakarta)
Russia 8-800-100-8556 Toll free
+41-41-726-9506 Pyсский
13:00 - 22:00 (Mon - Fri) (Asia/Jakarta)
Hong Kong +852-2156-7907 Direct dial 07:00 - 16:00 (Mon - Fri) (Asia/Jakarta)
Australia +61 (2) 8093 7300 Direct dial 07:00 - 16:00 (Mon - Fri) (Asia/Jakarta)
India +91 22 61289888 Direct dial
+91 22 39696188 Direct dial
10:00 - 19:00 (Mon - Fri) (Asia/Jakarta)
China +86 (21) 6086 8586 Direct dial 08:00 - 17:00 (Mon - Fri) (Asia/Jakarta)
Japan +81 (3) 4588 9700 Direct dial
+81 (3) 4588 9710 Direct dial (English)
06:30 - 15:30 (Mon - Fri) (Asia/Jakarta)

 

Please CLICK HERE if you are NOT BASED IN ASIA for your local time listings.

https://www.interactivebrokers.com/en/index.php?f=1560&p=contact



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