Tag Archives: Gainesville FL

One Of The Most Overbought Markets In History

My Comments: As someone with presumed knowledge about investing money, my record over these past 24 months has been pathetic. I’ve been defensive, expecting the markets to experience a significant correction “soon”…

I lived through the crash of 1987, the crash in 2000, and then the Great Recession crash in 2008-09. I saw first hand the pain and chaos from seeing one’s hard earned financial reserves decimated almost overnight.

Only the crash hasn’t happened. But every month there are new signals that one is imminent. And still it doesn’t happen.

I’ll leave it to you to decide if what Mr. Bilello says makes any sense. I’m not sure it does.

by Charlie Bilello, October 22, 2017

The Dow is trading at one of its most overbought levels in history. At 87.61, its 14-day RSI is higher than 99.999% of historical readings going back to 1900.

(Note: Developed by J. Welles Wilder, the Relative Strength Index (RSI) is a momentum oscillator that measures the speed and change of price movements. RSI oscillates between zero and 100. Traditionally, and according to Wilder, RSI is considered overbought when above 70 and oversold when below 30. Signals can also be generated by looking for divergences, failure swings, and centerline crossovers. RSI can also be used to identify the general trend. TK)

Sell everything?

If only it were that simple. Going back to 1900, the evidence suggests that such extreme overbought conditions (>99th percentile) are actually bullish in the near term, on average.

Come again? In the year following extreme overbought readings, the Dow has actually been higher roughly 70% of the time with an average price return of 14.2%. From 5 days forward through 1-year forward, the average returns and odds of positive returns are higher than any random day. While the 3-year and 5-year forward returns are below average, they are still positive.

Does that mean we’ll continue higher today? No, these are just probabilities, and 30% of the time the Dow is lower looking ahead one year.

What it does mean is that one cannot predict a market decline based solely on extreme overbought conditions. Declines can happen at any point in time and “overbought” is neither a predictor nor a precondition of a bear market to come.

If one is going to predict anything based on extreme overbought conditions (and I would advise against doing so), it would be further gains. I realize that doesn’t conform to the conventional narrative of “overbought = bearish,” but the truth in markets rarely does.

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FIA: Dream Investment or Potential Nightmare?

My Comments: The article below by Jane Bryant Quinn in the AARP Bulletin are fine, as far as they go.

My initial reaction was to reject her comments out of hand as they reflect a bias that to my mind is not accurate. But then I decided to expand on her thoughts. I apologize if I made this too technical for some of you.

Most of the Fixed Index Annuities (FIA) sold are probably very close to having the features and limitations she describes. If there is indeed $60B flowing into FIAs each year, then they are being sold by every run of the mill agent across the planet. And most of those are probably selling whatever their company is telling them to sell. A strong reason for them to sell FIAs is that they make good money for the company. If the client benefits, it’s an incidental benefit for most of them.

I decided to add my two cents worth, below in red, based on what I know after 40 plus years as an entrepreneur in financial services, and the qualities and features of the FIAs I’ve chosen to present to potential clients. You should draw your own conclusions about the merits of FIAs, or the lack thereof.

by Jane Bryant Quinn, AARP Bulletin, October 2017

I’m getting mail about an apparent dream investment. It promises gains if stocks go up, zero loss if they fall and guaranteed lifetime income, too. What’s not to like? Plenty, as it turns out.

The investment is called a fixed-index annuity, or FIA, and it’s issued by an insurance company. Sales are booming — $60.9 billion in 2016. FIA contracts vary, but this is how they work. (Sales are booming, not so much because of the financial benefits, but because they offer emotional benefits as well. ie “I get to stay invested in the markets and I won’t lose any money…”)

You buy the annuity with a lump sum, which goes into the insurer’s general fund. You are credited with a tax-deferred return that’s linked to the market — for example, to Standard & Poor’s index of 500 stocks. If the S&P rises over 12 months, you receive some of the gain. For example, your credits might be capped at an increase of 5 percent, even if the market soars. If stocks go down, you take no loss — instead, your FIA receives zero credit for the year. ( Many FIAs do have caps limiting the upside potential. The one’s I offer clients have NO caps. If the index goes up 50%, you get 50%. If it goes down 50%, you get nothing credited. You have shifted the downside risk to an insurance company. It also means that when the market goes back up again, you are starting from zero and not from somewhere lower. That in turn means at the end of the next crediting period, you are higher than if you were starting in a hole somewhere.)

Each year’s gains or zeros yield your total investment return. . (Your money is NOT invested in an index, whether it’s an S&P500 index or any of dozens of other indices. The yield on bonds inside the insurer’s general fund is used to buy option contracts and the return given the client is a function of the performance resulting from those options.) But I see problems:

Low returns. Salespeople might claim that FIAs could earn 6 or 7 percent a year. But with fees, they’ll struggle to match the low returns from bonds, says Michael Kitces of the wealth management firm Pinnacle Advisory Group in Columbia, Md.(The product I prefer buys 2 year option contracts with the bond yield. Over a ten year period, any ten year period since 2000, a 2 year option result exceeds two consecutive one year options 87% of the time. Some of this is due to the fact that 2 year options are cheaper than 1 year options. In this scenario, a 6% geometric mean return is not unreasonable.)

High fees. You can’t find out what you’re paying for investment management. Costs are buried in the black-box system used to adjust the credits to your account. Sales commissions run 5 to 7 percent and may be hidden, too. Under the new fiduciary rule, which requires advisers to put your interests ahead of theirs, commissions have to be disclosed if you’re buying the annuity for a retirement account, but not for other accounts.

Salespeople sometimes claim, falsely, that their services are free. (Numbers shown in hypothetical illustrations provide by sales agents are always net of fees. At least the ones I show prospective clients. Yes there are obviously costs inside FIAs. I’m sorry but no one works for free. What is critical, however, is the net return to you the buyer.)

Profit limits. Every year, the insurer can raise or lower the amount of future gain credited to your account. You face high risk that returns will be adjusted down. (Yes, this happens. It’s a function of market cycles, of interest rates in general, and the performance of the index chosen. The FIAs I offer have NO CAPS and will credit whatever the option used calls for.)

Poor liquidity. You can usually withdraw 10 percent in cash, each year, without breaking your guarantee. But you’ll owe surrender charges if you need your money back before five or 10 years are up. You might also forfeit some gains. ( This lack of liquidity is the price you pay for shifting the risk of loss to an insurance company. It’s the same thing you do with your car, your house, your life when you buy life insurance, etc. The benefit to you from this ‘cost” is the avoidance of downside risk associated with market corrections. Without the ability to offset this risk to an insurance company, many people opt instead for ‘guaranteed’ returns which actually means you are guaranteed to go broke if you get less than the increase in the cost of living. The cost of a guaranteed returns might mean you run out of money sooner.)

Lifetime benefits. For about 1.5 percent a year, you can add a “guaranteed lifetime withdrawal benefit” to your FIA. Promised yearly payments run about 5 percent. But, Kitces asks, why do it? Your basic FIA already provides a lifetime income. What’s more, 5 percent is not a return on your investment. The insurer is merely paying you your own money back, in 5 percent increments — and charging you 1.5 percent for the “service.” If you live long enough, you’ll exhaust your money and the insurer will pay, but that doesn’t happen often. ( I choose not to offer these anciliary benefits to clients. They serve to make more money for the company by playing to your fears.)

For a guaranteed income, try a plain-vanilla immediate or deferred annuity. It’s cheaper, and you’re not apt to be led astray. (It’s possible you will be led astray. The rules today do not support a fiduciary standard. They should, but our current administration is working hard to avoid that outcome. It’s back to buyer beware despite the best efforts of some who think all financial advisors should be legally required to work in a clients best interest.)

On balance, Jane Bryant Quinn’s comments are essentially correct. But only if you are talking about the arguably poor contracts that so many companies and their agents are interested in selling. If you find someone who is happy and willing to act in your best interest, you are much more likely to find FIAs that resemble the contracts I prefer for my clients. They are a way for you to stay invested in the markets and at the same time, remove the risk of market losses within a crediting cycle.

Don’t Screw Up Index Investing By Making These 3 Mistakes

My Comments: First, my thanks to all of you who wished us well during IRMA’s visit to Florida. We came through unscathed. We were without power for a number of days and believe me when I tell you cold showers every day are not much fun. And we are now watching Maria carefully.

Second, there is increasing evidence that active asset management is starting to pull ahead of passive investing, which is the focus of this article, written a year ago by Walter Updegrave. Some of the references may be out of date but not the underlying message.

Passive investing as a strategy is always ok for some of your money. Overlaying it with some tactical steps to add value is the next step, something that can be done effectively without going all in with skills you perhaps don’t have.

Walter Updegrave – August 10, 2016

For consistently competitive returns, index funds and their ETF counterparts are the way to go. If you doubt that, just take a look at this new Vanguard research paper that lays out the case for indexing and check out the latest S&P Dow Jones Indices index vs. active scorecard, which shows that fewer than 20% of large-company stock funds beat the Standard & Poor’s 500 index over the five- and 10-year periods ending Dec. 31. But just buying index funds and ETFs doesn’t guarantee investing success. To do that, you’ll also need to steer clear of these three all-too-common indexing mistakes.

Mistake #1: Assuming all index funds are cheap. Since index funds simply buy the stocks or bonds that make up indexes like the Standard & Poor’s 500 or Barclays U.S. Aggregate bond index rather than spend millions on costly research and manpower to identify which securities might perform best, they’re able to pass those savings along to shareholders in the form of lower annual fees. Lower fees translate to higher returns and more wealth over the long term. That advantage is especially valuable today given the forecasts for lower-than-usual investment returns in the years ahead.

But not all index funds and ETFs are bargains. While many are available at an annual cost of 0.10% or less, others sometimes charge 10 times or more than that amount, according to Morningstar data. For example, one fund, Rydex S&P 500 Class C, levies a whopping 2.31% in annual expenses, prompting this headline on a recent post about the fund on the American Institute For Economic Research’s Daily Economy blog: “Is This the Worst Mutual Fund in the World?”

Before you invest in an index fund or ETF, make it a point to know how much it charges in annual fees, especially if you’re investing through a broker or other financial adviser. Then don’t buy unless its expenses compare favorably to funds or ETFs that track the same benchmark. You can gauge whether you’re overpaying by seeing how the expenses of the fund you’re considering stack up versus the expenses of the index funds and ETFs that made the cut for the Money 50, Money Magazine’s list of the best mutual funds and ETFs.

Mistake #2: Playing the niche index game. The beauty of index investing is that it allows you to easily and inexpensively create a well-balanced portfolio for retirement savings or other money you’re looking to invest. For example, by combining just three funds—a total U.S. stock market index fund, a total international stock index fund and a total U.S. bond market index fund (or their ETF counterparts)—you have the foundation for a broadly diversified portfolio of stocks and bonds that can get you to and through retirement.

But many investors fall into the trap of believing that the more bases they cover, the more diversified and better off they’ll be. And investment firms are all too willing to oblige them by marketing ever more specialized index offerings, allowing investors to invest in indexes that track everything from wind power and cyber security to obesity and organic foods.

Diversity is a good thing, but you don’t want to overdo it. Once you have a diversified portfolio of stocks and bonds, the extra benefit you get from venturing into investments that focus on narrow slices of the market or obscure niches can be minuscule or even disappear, since more arcane investments often carry higher fees. You also run the risk of ending up with an unwieldy and overlapping jumble of holdings that’s difficult to manage. And, let’s face it, a lot of what’s done in the name of broader diversification is really more about riding the latest fad.

In short, the more you stick to tried-and-true index funds that track wide swaths of the market at a low cost and resist the temptation to invest in every new indexing variation some firm churns out, the less likely you’ll end up “di-worse-ifying” rather than diversifying your portfolio.

Mistake #3: Using index funds to gamble rather than invest. When the indexing revolution got underway back in the 1970s, the idea was for investors to track the performance of broad market benchmarks like the Standard & Poor’s 500 index. The rationale was that since it’s so difficult to outperform the market, investors are better off trying to match the market’s return as much as possible.

Today, however, many investors see index funds as vehicles that can help them juice performance by quickly darting in and out of the stock or bond market as a whole or making bets on a sector they believe is poised to soar, be it growth, value, small stocks, energy, technology, whatever. ETFs are especially popular with such investors since, unlike regular index funds, ETFs are priced constantly throughout the day and can be traded the same as stocks.

Problem is, succeeding at this approach requires investors to have the foresight to know where the market or specific sectors are headed. That’s a dubious assumption at best. Consider how investors swarmed into tech and growth stocks at the end of the ’90s dot.com bubble, confident that double- or even triple-digit returns would continue, only to see shares crash and burn. Or, more recently, how pundits were predicting Armageddon for stocks in the wake of the Brexit vote, only to see the market climb to new highs.

Bottom line: Indexing works best when you use low-cost index funds that cover broad segments of the stock and bond markets as building blocks to create a diversified portfolio that matches your tolerance for risk—and that, aside from periodic rebalancing, you’ll stick with through good markets and bad. Remember that, and you’ll be more likely to benefit from all that indexing has to offer.

Why Sign Up for Medicare If I Have Insurance Already?

My Comments: I’m increasingly asked about signing up for Medicare at 65 or not. This happens as more and more of us are still working at age 65 and expect to keep working for several years to come. This article by Matthew Frankel will give you the background necessary to help your decision.

by Matthew Frankel \ Jul 16, 2017

The standard eligibility age for Medicare in the United States is 65. However, many people don’t know if they need to sign up for Medicare if they already have other health insurance coverage, such as through a job, a spouse’s employer, from their former employer, or through COBRA. Here’s a quick guide that can help you determine if you need to sign up for Medicare when you turn 65 or if you can wait longer without paying a penalty.

How Medicare works with your other insurance

When you have more than one insurance provider, there are certain rules that determine who pays what it owes first and who pays based on the remaining balance. For seniors who don’t have other insurance, Medicare is obviously the primary payer. However, when you have other insurance, it’s a little more complicated.

Depending on the type of insurance you have (group coverage, retiree coverage, COBRA, marketplace coverage, etc.), Medicare can either be the primary or the secondary payer. If Medicare would be a secondary payer to your current insurance, you can delay signing up for Medicare Part B. If your current insurance would become a secondary payer to Medicare, you should sign up during your initial enrollment period, which is the seven-month period that begins three months prior to the month you’ll turn 65.

It’s also worth noting that although I’m specifically mentioning Medicare Part B, which is medical insurance, this applies to Part A (hospital insurance) as well. However, Medicare Part A is free to the vast majority of Americans, so it’s probably worth signing up for Part A whether you’re required to or not. On the other hand, Medicare Part B has a monthly premium you’ll have to pay, which is why it can make sense to delay signing up if it’s not going to be your primary insurance.

Who can delay signing up for Medicare?

So, whose insurance remains the primary payer? In a nutshell, if you have coverage through your or your spouse’s current employment, and the employer has 20 or more employees, your insurance plan remains the primary payer.

If you aren’t sure if your employer meets the “group health coverage” criteria, ask your employer’s benefits manager.

If you do qualify, you can delay signing up for Medicare for as long as you (or your spouse) are still working. Once the employment or your employer-based health coverage ends, you’ll have eight months to sign up for Medicare Part B without paying a penalty, which is a permanently higher premium.

It’s also important to note that regardless of whether you’re still working or not, if you’ve already signed up for Social Security benefits, you’ll be automatically enrolled in Medicare Parts A and B when you turn 65. If you don’t want to keep Part B, you’ll need to cancel it (instructions are on the Medicare card you’ll receive).

Who should sign up at 65, even if they have other insurance?

This leaves a fairly long list of other types of insurance that become secondary payers to Medicare. Therefore, if you’re turning 65 and any of these situations apply to you, you should sign up for Medicare during your initial enrollment period.

• You have group coverage through your or your spouse’s employer, but the employer has fewer than 20 workers.

• You have retiree coverage, either through your former employer or your spouse’s former employer.

• You have group coverage through COBRA.

• You have TRICARE, the healthcare program for military service members, retirees, and their families. Retired service members must get Medicare Part B when eligible in order to keep their TRICARE coverage. (Note: If you’re still on active duty, you don’t have to enroll in Medicare until after you retire.)

• You have veterans’ benefits.

• You have coverage through the healthcare marketplace or have other private insurance. Once your Medicare coverage begins, you’ll no longer get any reduced premium or tax credit for marketplace coverage, and you should drop this coverage as you’ll no longer need it (unless you’re not eligible for premium-free Part A, which is not common).

If one of these situations applies to you and you don’t sign up for Medicare Part B during your initial enrollment period, you could face permanently higher premiums when you do.

Disruption Of Confidence

Monday = Investing Money:

I’d like to think that my posts help someone, anyone? Professionally I’ve lived in the financial world for over 40 years and it pains me to say I haven’t a clue what’s going to happen next. What’s telling is that others, far more competent than I, don’t have a clue either.

Lance Roberts, whose comments I share this week, is a technician, attempting to glean clues from a rigorous adherence to mathematics and the signals that supposedly exist and reveal the future when correctly interpreted. Tread carefully.

Aug. 20, 2017 Lance Roberts Seeking Alpha

As noted last week:
“The weakness in the market previously, combined with the threats between the U.S. and North Korea, led to a fairly sharp unwinding in equities on Thursday which in turn triggered a short-term sell signal.

That sell-off has remained confined to the current bullish trend line but has threatened to violate the 50-dma (day/daily moving average). If the market is unable to regain the 50-dma on Monday, and remain above it for the balance of the coming week, the most likely move in the markets will be lower.”

I have updated the chart above (see HERE) through Friday afternoon. I followed that analysis up on Tuesday, stating:
“On Monday, the market surged out of the gate as headlines suggested ‘geopolitical risk’ had subsided. I find this particular explanation hard to digest, given the rising rhetoric of a potential trade war with China, violence in Charlottesville over the weekend, no resolution with North Korea, etc., so forth, and so on. I find little evidence of a global turn in geopolitical stresses currently.

Monday’s ‘buy the dip’ frenzy was no different. The question will be whether the market can both reverse the short-term ‘sell signal’ and climb above the previous resistance of the old highs? Such a reversal would end the current consolidation process and allow for additional capital to be invested.”

That was so last Tuesday…

The reversal, at least to this point, was not to be the case.

Exactly one week after last week’s sell-off, the market dumped again. This time it was the news of the complete dismemberment of President Trump’s “economic council” of CEOs along with the rumor that Gary Cohn would be exiting his position at the White House as well. While the latter turned out to be #FakeNews, the damage had already been done as market participants began to question the ability of the Administration to get its promised legislative action advanced.

Given the run-up in the markets since the election, which was based on tax cuts/reform, infrastructure spending, repatriation and repeal of the Affordable Care Act, the lack of progress on that agenda has left the markets pushing higher on “hope” and “promises.” The disbanding of the economic council has led to some disruption of that confidence.

Importantly, with the market currently on a weekly sell signal, it also compounded the bulls’ problems by breaking the bullish trend line that begins in February of last year.

This is not a “panic and sell everything” signal…yet.

It is, however, a potentially important change to the bullish backdrop of the market in the short-term particularly given the ongoing deterioration in the internal participation in the market. Note that when sell signals have been triggered from similarly high levels (vertical red dashed lines), subsequent corrections have been fairly brutal.

Previously, I questioned whether or not to “buy the dip?”

“My best guess currently is – probably. But not yet.”

I also stated the following two reasons for that sentiment:

1. Bull markets don’t typically end when the mainstream media is “peeing down both legs” over the 1.5% drop on Thursday.

2. The bullish uptrend remains intact and “fear” gauges remain confined to a downtrend.

This remains this week as well. The sell-off so far remains contained above the previous bullish breakout to new highs and remains above current price support levels. Furthermore, while volatility did pick up a bit on Thursday, it has not exceeded last week’s volatility spike, suggesting traders are less worried about a correction than media headlines makes it appear.

Trump Can’t Reverse the Decline of White Christian America

My Comments: Remember the context. Racial tension has been a hallmark of our society since the beginning. Think pilgrims vs indigenous peoples in the 1620’s. Think black vs white in the 1860’s.

Right now the tension is elevated, and coupled with Trump’s inability or unwillingness to quash the tension, overreaction is going to surface. Reaction, within limits, will allow the ideology behind the tension to fade or lose. Otherwise the message becomes all about the confrontation rather than the underlying false premises of bigotry, racism, religion and political ideology.

Robert P. Jones \ Jul 4, 2017

Two-thirds of those who voted for the president felt his election was the “last chance to stop America’s decline.” But his victory won’t arrest the cultural and demographic trends they opposed.

Down the home stretch of the 2016 presidential campaign, one of Donald Trump’s most consistent talking points was a claim that America’s changing demographics and culture had brought the country to a precipice. He repeatedly cast himself as the last chance for Republicans and conservative white Christians to step back from the cliff, to preserve their power and way of life. In an interview on Pat Robertson’s Christian Broadcasting Network (CBN) in early September, Trump put the choice starkly for the channel’s conservative Christian viewers: “If we don’t win this election, you’ll never see another Republican and you’ll have a whole different church structure.” Asked to elaborate, Trump continued, “I think this will be the last election that the Republicans have a chance of winning because you’re going to have people flowing across the border, you’re going to have illegal immigrants coming in and they’re going to be legalized and they’re going to be able to vote, and once that all happens you can forget it.”

Michele Bachmann, a member of Trump’s evangelical executive advisory board, echoed these same sentiments in a speech at the Values Voters Summit, an annual meeting attended largely by conservative white Christians. That same week, she declared in an interview with CBN: “If you look at the numbers of people who vote and who lives [sic] in the country and who Barack Obama and Hillary Clinton want to bring in to the country, this is the last election when we even have a chance to vote for somebody who will stand up for godly moral principles. This is it.” Post-election polling from the Public Religion Research Institute, which I lead, and The Atlantic showed that this appeal found its mark among conservative voters. Nearly two-thirds (66 percent) of Trump voters, compared to only 22 percent of Clinton voters, agreed that “the 2016 election represented the last chance to stop America’s decline.”

Does Trump’s victory, then, represent the resurrection of White Christian America? The consequences of the 2016 elections are indeed sweeping. Republicans entered 2017 with control of both houses of Congress and the White House. And because the Republican-controlled Senate refused to consider an Obama appointee to replace Justice Antonin Scalia, who died in early 2016, Trump was able to nominate a conservative Supreme Court justice right out of the gate. Trump’s cabinet and advisors consist largely of defenders of either Wall Street or White Christian America.

The evidence, however, suggests that Trump’s unlikely victory is better understood as the death rattle of White Christian America—the cultural and political edifice built primarily by white Protestant Christians—rather than as its resuscitation. Despite the election’s immediate and dramatic consequences, it’s important not to over-interpret Trump’s win, which was extraordinarily close. Out of more than 136 million votes cast, Trump’s victory in the Electoral College came down to a razor-thin edge of only 77,744 votes across three states: Pennsylvania (44,292 votes), Wisconsin (22,748 votes), and Michigan (10,704 votes). These votes represent a Trump margin of 0.7 percentage points in Pennsylvania, 0.7 percentage points in Wisconsin, and 0.2 percentage points in Michigan. If Clinton had won these states, she would now be president. And of course Clinton actually won the popular vote by 2.9 million votes, receiving 48.2 percent of all votes compared to Trump’s 46.1 percent. The real story of 2016 is that there was just enough movement in just the right places, just enough increased turnout from just the right groups, to get Trump the electoral votes he needed to win.

Trump’s intense appeal to 2016 as the “last chance” election seems to have spurred conservative white Christian voters to turn out to vote at particularly high rates. Two election cycles ago in 2008, white evangelicals represented 21 percent of the general population but, thanks to their higher turnout relative to other voters, comprised 26 percent of actual voters. In 2016, even as their proportion of the population fell to 17 percent, white evangelicals continued to represent 26 percent of voters. In other words, white evangelicals went from being overrepresented by five percentage points at the ballot box in 2008 to being overrepresented by nine percentage points in 2016. This is an impressive feat to be sure, but one less and less likely to be replicated as their decline in the general population continues.

Updating two trends with 2015-2016 data also confirms that the overall patterns of demographic and cultural change are continuing. The chart below plots two trend lines that capture key measures of change: the percentage of white, non-Hispanic Christians in the country and the percentage of Americans who support same-sex marriage. The percentage of white Christians in the country fell from 54 percent in 2008 to 47 percent in 2014. That percentage has fallen again in each subsequent year, to 45 percent in 2015 and to 43 percent in 2016. Similarly, the percentage of Americans who supported same-sex marriage rose from 40 percent in 2008 to 54 percent in 2014. That number stayed relatively stable (53 percent) in 2015—the year the Supreme Court legalized same-sex marriage in all 50 states—but jumped to 58 percent in 2016.

Despite the outcome of the 2016 elections, the key long-term trends indicate White Christian America’s decline is continuing unabated. Over the last eight years, the percentage of Americans who identify as white and Christian fell 11 percentage points, and support for same-sex marriage jumped 18 percentage points. In a New York Times op-ed shortly after the election, I summarized the results of the election this way: “The waning numbers of white Christians in the country today may not have time on their side, but as the sun is slowly setting on the cultural world of White Christian America, they’ve managed, at least in this election, to rage against the dying of the light.”

One of the most perplexing features of the 2016 election was the high level of support Donald Trump received from white evangelical Protestants. How did a group that once proudly identified itself as “values voters” come to support a candidate who had been married three times, cursed from the campaign stump, owned casinos, appeared on the cover of Playboy Magazine, and most remarkably, was caught on tape bragging in the most graphic terms about habitually grabbing women’s genitals without their permission? White evangelical voters’ attraction to Trump was even more mysterious because the early GOP presidential field offered candidates with strong evangelical credentials, such as Ted Cruz, a longtime Southern Baptist whose father was a Baptist minister, and Marco Rubio, a conservative Catholic who could talk with ease and familiarity about his own personal relationship with Jesus.

The shotgun wedding between Trump and white evangelicals was not without conflict and objections. It set off some high drama between Trump suitors, such as Jerry Falwell Jr. of Liberty University and Robert Jeffress of First Baptist Church in Dallas, and #NeverTrump evangelical leaders such as Russell Moore of the Southern Baptist Convention. Just days ahead of the Iowa caucuses, Falwell invited him to speak at Liberty University, where he serves as president. In his introduction, Falwell told the gathered students, “In my opinion, Donald Trump lives a life of loving and helping others as Jesus taught in the great commandment.” And a week later, he officially endorsed Trump for president. Robert Jeffress, the senior pastor of the influential First Baptist Church in Dallas and a frequent commentator on Fox News, also threw his support behind Trump early in the campaign but took a decidedly different approach. Jeffress explicitly argued that a president’s faith is “not the only consideration, and sometimes it’s not the most important consideration.” Citing grave threats to America, particularly from “radical Islamic terrorism,” Jeffress’ support of Trump for president was straightforward realpolitik: “I want the meanest, toughest, son-of-a-you-know-what I can find in that role, and I think that’s where many evangelicals are.” Moore, by contrast, remained a steadfast Trump opponent throughout the campaign. He was aghast at the high-level embrace of Trump by white evangelical leaders and strongly expressed his incredulity that they “have tossed aside everything that they previously said they believed in order to embrace and to support the Trump candidacy.”

The 2016 election, in fact, was peculiar because of just how little concrete policy issues mattered.

In the end, however, Falwell and Jeffress had a better feel for the people in the pews. Trump received unwavering support from white evangelicals from the beginning of the primaries through Election Day. As I noted at the beginning of the primary season, the first evidence that Trump was rewriting the Republican playbook was his victory in the South Carolina GOP primary, the first southern primary and one in which more than two-thirds of the voters were white evangelicals. The Cruz campaign had considered Super Tuesday’s South-heavy lineup to be its firewall against early Trump momentum. But when the returns came in, Cruz had won only his home state of Texas and neighboring Oklahoma, while Trump had swept the southern states, taking Georgia, Alabama, Tennessee, Virginia, and Arkansas. Trump ultimately secured the GOP nomination, not over white evangelical voters’ objections, but because of their support. And on Election Day, white evangelicals set a new high water mark in their support for a Republican presidential candidate, backing Trump at a slightly higher level than even President George W. Bush in 2004 (81 percent vs. 78 percent).

Trump’s campaign—with its sweeping promise to “make American great again”—triumphed by converting self-described “values voters” into what I’ve called “nostalgia voters.” Trump’s promise to restore a mythical past golden age—where factory jobs paid the bills and white Protestant churches were the dominant cultural hubs—powerfully tapped evangelical anxieties about an uncertain future.

The 2016 election, in fact, was peculiar because of just how little concrete policy issues mattered. The election, more than in any in recent memory, came down to two vividly contrasting views of America. Donald Trump’s campaign painted a bleak portrait of America’s present, set against a bright, if monochromatic, vision of 1950s America restored. Hillary Clinton’ campaign, by contrast, sought to replace the first African American president with the first female president and embraced the multicultural future of 2050, the year the Census Bureau originally projected the United States would become a majority nonwhite nation. “Make American Great Again” and “Stronger Together,” the two campaigns’ competing slogans, became proxies for an epic battle over the changing face of America.

The gravitational pull of nostalgia among white evangelicals was evident across a wide range of public opinion polling questions. Just a few weeks before the 2016 election, 66 percent of white evangelical Protestants said the growing number of newcomers from other countries threatens traditional American customs and values. Nearly as many favored building a wall along the U.S. border with Mexico (64 percent) and temporarily banning Muslims from other countries from entering the U.S. (62 percent). And 63 percent believed that today discrimination against whites has become as big a problem as discrimination against blacks and other minorities. White evangelicals also stood out on broad questions about cultural change. While Americans overall were nearly evenly divided on whether American culture and way of life have changed for worse (51 percent) or better (48 percent) since the 1950s, white evangelical Protestants were likelier than any other demographic group to say things have changed for the worse since the 1950s (74 percent).

It is perhaps an open question whether Trump’s candidacy represents a true change in evangelicals’ DNA or whether it simply revealed previously hidden traits, but the shift from values to nostalgia voter has undoubtedly transformed their political ethics. The clearest example of evangelical ethics bending to fit the Trump presidency is white evangelicals’ abandonment of their conviction that personal character matters for elected officials. In 2011 and again just ahead of the 2016 election, PRRI asked Americans whether a political leader who committed an immoral act in his or her private life could nonetheless behave ethically and fulfill their duties in their public life. In 2011, consistent with the “values voter” brand and the traditional evangelical emphasis on the importance of personal character, only 30 percent of white evangelical Protestants agreed with this statement. But with Trump at the top of the Republican ticket in 2016, 72 percent of white evangelicals said they believed a candidate could build a kind of moral dike between his private and public life. In a head-spinning reversal, white evangelicals went from being the least likely to the most likely group to agree that a candidate’s personal immorality has no bearing on his performance in public office.

Fears about the present and a desire for a lost past, bound together with partisan attachments, ultimately overwhelmed values voters’ convictions. Rather than standing on principle and letting the chips fall where they may, white evangelicals fully embraced a consequentialist ethics that works backward from predetermined political ends, bending or even discarding core principles as needed to achieve a predetermined outcome. When it came to the 2016 election, the ends were deemed so necessary they justified the means. As he saw the polls trending for Trump in the last days before the election, in no small part because of the support of white evangelicals, Russell Moore was blunt, lamenting that Trump-supporting evangelicals had simply adopted “a political agenda in search of a gospel useful enough to accommodate it.”

White evangelicals have entered a grand bargain with the self-described master dealmaker, with high hopes that this alliance will turn back the clock. And Donald Trump’s installation as the 45th president of the United States may in fact temporarily prop up, by pure exertions of political and legal power, what white Christian Americans perceive they have lost. But these short-term victories will come at an exorbitant price. Like Esau, who exchanged his inheritance for a pot of stew, white evangelicals have traded their distinctive values for fleeting political power. Twenty years from now, there is little chance that 2016 will be celebrated as the revival of White Christian America, no matter how many Christian right leaders are installed in positions of power over the next four years. Rather, this election will mostly likely be remembered as the one in which white evangelicals traded away their integrity and influence in a gambit to resurrect their past.

Meanwhile, the major trends transforming the country continue. If anything, evangelicals’ deal with Trump may accelerate the very changes it was designed to arrest, as a growing number of non-white and non-Christian Americans are repulsed by the increasingly nativist, tribal tenor of both conservative white Christianity and conservative white politics. At the end of the day, white evangelicals’ grand bargain with Trump will be unable to hold back the sheer weight of cultural change, and their descendants will be left with the only real move possible: acceptance.

This article has been excerpted from the new Afterword in the paperback version of Robert P. Jones’ book, The End of White Christian America.

The Danger From Low-Skilled Immigrants: Not Having Them

My Comments: To Make America Great Again, the presumably well intentioned mantra for those leading the GOP these days, someone has to overcome ignorance of economics and start paying attention to reality.

A positive corporate bottom line is the driving force for a healthy US economy. To reach that goal, we need people willing to spend time in the trenches doing whatever grunt work is necessary. Despite machines that increasingly automate the grunt work, a supply of young people has to match the demand created until artificial intelligence takes over.

The supply of labor is not going to miraculously appear. A greater number of us are old and fragile, and fertility rates among young men are declining. Exactly who is going to look after all us old folks because we refuse to hurry up and die?

We should be encouraging immigration and refugees. Yes, there is a potential security threat, which implies applying resources to screen and maintain a reasonable level of security. And yes, someone is probably going to get killed or maimed or whatever when someone nefarious sneaks through.

The laws of supply and demand are well known. Right now we have an increasing demand for labor, which can only stabilize with either more people being allowed into the country, or a large increase in the cost of labor to force more of into the trenches. Either that or starve, in which case you die. Some would have that happen since dead people are less likely to vote against those wanting to restrict immigration.

Eduardo Porter \ August 8, 2017

Let’s just say it plainly: The United States needs more low-skilled immigrants.

You might consider, for starters, the enormous demand for low-skilled workers, which could well go unmet as the baby boom generation ages out of the labor force, eroding the labor supply. Eight of the 15 occupations expected to experience the fastest growth between 2014 and 2024 — personal care and home health aides, food preparation workers, janitors and the like — require no schooling at all.

“Ten years from now, there are going to be lots of older people with relatively few low-skilled workers to change their bedpans,” said David Card, a professor of economics at the University of California, Berkeley. “That is going to be a huge problem.”

But the argument for low-skilled immigration is not just about filling an employment hole. The millions of immigrants of little skill who swept into the work force in the 25 years up to the onset of the Great Recession — the men washing dishes in the back of the restaurant, the women emptying the trash bins in office buildings — have largely improved the lives of Americans.

The politics of immigration are driven, to this day, by the proposition that immigrant laborers take the jobs and depress the wages of Americans competing with them in the work force. It is a mechanical statement of the law of supply and demand: More workers spilling in over the border will inevitably reduce the price of work.

This proposition underpins President Trump’s threat to get rid of the 11 million unauthorized immigrants living in the country. It is used to justify his plan to cut legal immigration into the country by half and create a point system to ensure that only immigrants with high skills are allowed entrance in the future.

But it is largely wrong. It misses many things: that less-skilled immigrants are also consumers of American-made goods and services; that their cheap labor raises economic output and also reduces prices. It misses the fact that their children tend to have substantially more skills. In fact, the children of immigrants contribute more to state fiscal coffers than do other native-born Americans, according to a report by the National Academies.