My name is Neil George, and I am very ecstatic and privileged to be taking over the helm from Richard Band for Profitable Investing. Again, Richard and I go back many, many years back when I was a banker and he was helming Profitable Investing back in the early ‘90s. We first started to engage each other on one of his investment ideas involving the Canadian dollar and the Canadian interest rate market. Back then, the Canadian dollar was considered somewhat cheap. Richard saw it as being an opportunity for some appreciation, and interest rates were doing very well there, and back then I was working for a small bank in St. Louis called Mark Twain Bank, and we actually offered individual investors the ability to invest in markets like Canada and elsewhere.

So, Richard and I had a lengthy conversation about the ins and outs, the pitfalls and so forth and the opportunities, and we hit it off, and he made a recommendation in Profitable Investing to buy Canadian Treasury bills for the yield as well as for the appreciation of the Canadian dollar. Lo and behold, as many of Richard’s prognostications have happened over the past three decades, it worked out exceedingly well. Subscribers came to the bank by the thousands, and they profited by the higher yield and the appreciation, and the relationship with Richard Band commenced.

So then over the ensuing many years, Richard and I would meet up at various conferences like The Money Shows and so forth. We’d share a meal now and again and talk about the financial markets, talk about some of the individual securities as well as many of our common interests including his old car hobby and other things. Again, it’s something whereby I always basically have thought very highly of Richard and enjoyed his company and enjoyed his insights in the financial markets and life in general. So, lo and behold, having the opportunity to step into his shoes and continue his legacy is a thrill for me and quite a privilege that I’m basically taking quite seriously to continue to provide you actionable advice that will carry you through both the prosperous markets as well as some of the challenging.

Now the whole thing about Profitable Investing, as Richard basically founded all these years, is it’s an investment and financial guide for all seasons, and certainly over the past few months particularly we seem to have seen all those seasons come all in a matter of a quarter. We’ve seen very bullish moves, and we’ve seen some precarious downdrafts in the marketplace which has been testing for a lot of investors, a lot of fund managers and, therefore, I think the key thing in this presentation, I’m going to be detailing what I see as some of the opportunities as well as the threats going forward for us.

Again, I’m also again quite thrilled to have your confidence. I’ve been at work very hard to be able to maintain and keep that confidence yet going forward. Also, it’s interesting to note that this is really the second time that I’ve followed Richard into publications because Richard, prior to Profitable Investing, was in charge and editor in chief for a publication called Personal Finance which I contributed for many years during the ‘90s and into the 2000s and then took over as editor for that publication. So again, following in Richard’s footsteps is something that I basically have found to be quite rewarding, and again subscribers have found it to be quite profitable for them over time.

So, a couple housekeeping notes. First off, the video recording of the webinar will be posted to the website, and then within a week’s time we’re going to have the transcript posted as well. So, you’ll be able to re-listen, watch as well as be able to read through all the commentary, and for those that have missed it and so forth, they’ll also have access to the video as well as the transcript.

So, in the presentation I’m going to talk about some of the facets in the marketplace, give you my observations of what I see happening now and going forward. Then we’re going to have an

exhaustive period of time which I’m going to be addressing many of your questions and comments that you have been sending in and I’ve been going through. So that’s going to be quite helpful I think for all of us in the session. So, the key thing we’re going to look to start off with are the opportunities and threats in the financial marketplace.

So the idea that we have as our objective for Profitable Investing is we always want to start, and this is where I’m going to continue with the process of focusing on finding the great stocks, bonds and funds, and the way that I basically do it is not too dissimilar from Richard in which I’m constantly reading, listening and watching all sorts of market and economic and general broad news to be able to determine and find where some of the best opportunities are in the marketplace as well as some of the threats that are going to be hitting us in some of these opportunities.

The one thing that I might do somewhat more differently, and certainly I think is really a cornerstone for my process, is I’m not only a big consumer of many, many different types of media, both financial and general news, but I’m constantly making my notes in which I’m up before dawn in the morning, consuming newspapers, consuming my news services, and I’m making my notations as far as individual stocks and companies and what they’re coming out with and what are some of their challenges as well as some of the general market things that are occurring, whether it’s developments that are happening in governments here or elsewhere, whether it’s societal trends or developments or other sorts of non-company-specific news.

Therefore, each and every day I am consuming various news and I am basically enabled to sort of connect the dots as far as some of the elements that I find. Therefore, when I basically come with a recommendation, I usually come to it in one of two ways. The first is I will come from sort of the top down approach. This is where I’ve identified a general macro economic or a business trend, and I basically dive through and find the leading companies within this particular segment that is already an industry leader, and I find a company that’s not only a major leader but one that is expanding their sales at a faster pace than their peer group.

Then I basically take it a step further, and I look through the profitability of the company, the idea of looking at the margins. So, what I’m looking for is a company that’s not only bolstering their revenues from a particular market development but also watching their costs and expanding their profitability, their operating margins on every bit of service or every product that they bring and sell to the marketplace. Therefore, by doing that, I can start to identify sort of the companies that are working successful.

Now the other approach is from the bottom up in which periodically I will come across an individual company that is coming forward with a particular development, and I’ll do the same sort of thing. I’ll do the analysis as far as what’s happening with the company. How profitable is this company going to be? How are they generating their sales? Therefore, again examine what is working well for that particular company. But more importantly, and this is where I think you’ll find that my approach is very helpful as far as being defensive and avoiding some of the pitfalls, is before a recommendation I determine what will go wrong.

Now for companies in just about any industry, there are two basic threats to what will go wrong for their business and for their shareholders. Either they’re going to be selling less of their stuff or their services, or it’s going to cost more to generate those services or to build and sell those products.

Therefore, I want to look back at the company’s history and look to when they last had those sort of challenges and see how they basically plowed through. What happened with the cash flows of the company? How dividends were impacted and how they were able to prove that they were a successful company.

If I can’t find those historical examples, then I’m going to basically calculate the impact in a model and then come to a conclusion as far as, will the company be able to sustain itself when they either sell less stuff or it costs more to generate those sort of sales? Therefore, the key thing is to have an understanding and a more complete understanding of how that company is actually going to be able to fare both in good and bad times. Therefore, to have sort of a plan with each recommendation before we buy the individual investment.

For this reason, this basically will help to prove out in which we’ll be able to have fewer surprises because we’ll know upfront what might very well happen that’s going to impede the progress of a particular company, a particular fund or a particular bond investment before we make the investment.

The next major thing that I also want to always be focused on is I put on my old sort of banker hat with the idea that I’m always looking for how I’m going to get paid on the investment. In other words, the dividend, the growth that’s going to be happening to sort of have sort of a plan before the recommendation is made and particularly with a focus on the dividends because I basically have always held the position that I basically want to be focused more so on companies and other investments and funds that are paying good solid and increasing streams of dividend income that not only will help to grow our wealth in our portfolios but will also be carry us through during some of the more challenging market times. So again, focusing on a lot of the investments and how we’re going to get paid.

I also am going to be looking for proven growth. What I mean by proven growth is the idea of looking at companies and determining how and why they’re going to be successful, how and why they’re going to be able to avoid running into challenges, but also I’m going to look for how the market treats them because as I’ve observed over the past many decades, I’ve seen many companies that might very well be great as far as running their businesses, building their internal values, but if the market doesn’t necessarily reward shareholders then that’s basically not necessarily worth our time to buy into that particular investment. Therefore, I want to see market recognition of that growth given time.

Then the last thing that’s I think very crucial for profitable investing is that I always want to be looking forward, not back in time. In other words, when we have a recommendation and we have a buy and we have a stock, bond or fund in the portfolio, I’m basically going through the review process issue by issue to note with the question, would I buy this individual investment all over again and under what price? Therefore, it doesn’t really matter what we paid for it in the past. It doesn’t necessarily matter if it was very successful or if it was down. It really only matters as far as going forward.

What are the prospects for that individual investment? What are the risks for that investment, and would I buy it all over again? Therefore, this helps me to avoid what I’ve basically termed in the past as being sort of a hold and hope; the idea that we hold something and hope something improves rather than taking action. Therefore, I think going forward I think you’ll find that to be a very useful tool not only for the Profitable Investing portfolios but for your own individual portfolios.

When you go through statements, review what each item that you’re having and ask yourself, would I buy this investment all over again and under what price? That’s basically something that I’m going to continue to do for Profitable Investing. So now let’s start looking at the individual markets, and I’m going to break it down by the stocks and the bond and the fixed income markets. Then we’re going to look at some of the individual facets of each parts of this market and where I see things going forward and where I see some opportunities.

So, for the stock market right now, we have some fairly positive underlying economic conditions not only in the U.S. but on the global scale. We have unemployment continues to be at extremely low levels, and we also have seen some wage growth which means that those that are in the employed ranks not only have jobs but also, they’re starting to see some wage growth, but the positive part of that equation of the wage growth is it’s not necessarily showing up in creating any sort of inflationary pressures which I’ll address in a moment.

We also are seeing that because of the employment and because of some of the rising wages that we’re seeing particularly in the U.S. marketplace, that the consumer has basically continued to be fairly stable to improving in their consumption and, therefore, the consumer which is a big portion ... the vast majority of the U.S. domestic economy is very much in force at contributing to sales for our various companies in the portfolio and many others in the marketplace that we’ll be seeing in the coming issues.

The other part of the equation within the consumers is that we also are seeing credit for consumers is still fairly robust as well. So, consumers not only are having more cash coming into them from their employment, but they also are seeing some further access to credit coming from banks and other financials helping to continue their spending.

The one thing that might be of concern is that spending is still outpacing the savings rate and, therefore, for the near term that provides buoyancy for companies that are serving the consumer because they’re obviously having a higher level of confidence to spend, but obviously from a sustained standpoint we definitely want to be able to be eyeballing the savings part because the savings obviously is good to be able to have that buffer part for the economy if in fact we start seeing a bit of a pullback.

Now one of the other things that are happening that I think are very positive for the stock market right now and for many different companies are two major developments that have occurred fairly recently. The first is the Tax Cuts and Jobs Act of 2017. This was the major overhaul of corporate tax rates as well as income tax rates for many individuals, particularly in some of the lower tax brackets.

But most importantly, looking at it from the company standpoint, the Tax Cuts and Jobs Act effectively brings the effective corporate tax rate from the 35 percent rate down to the 21 percent rate. Therefore, this is basically not only freeing up a lot of cash that has been already sort of in the process of being repatriated as far as how it’s held in the books of many of the Fortune 500 and S&P 500 stocks, but as earnings seasons starts to kick off in the ensuing days and weeks, we’re going to see a dramatic impact on many different companies as they start to report their earnings numbers.

Therefore, what we’re going to be looking for along there is the idea of seeing how various companies in various segments are going to be able to capitalize on the lower effective tax rates, as far as being able to generate a greater amount of after-tax cash which then can be used to fund dividends, to fund buybacks as well as to fund further investments within the company standpoint. So, I think this

is a major sort of improvement that we already are expecting to see for the first quarter, and we’re going to be looking to see how it’s going to be playing out in the ensuring quarters.

The one that I will make in looking at the first quarter numbers is that when I’m going to be looking at each of the first quarter numbers, I’m going to be looking not only for what occurred in the past quarter but I’m going to be very focused on the guidance on what they see going forward as far as the impacts of the tax rates and the effect on what they’re going to be having on the company’s profitability going forward. So, I’m going to be looking at that very carefully as we start to see the first quarter reports for all of our portfolio holdings as well as some of the pending companies I’m examining.

The second significant development that I’m seeing in the stock market is a big development as far as regulatory certainty. Now with the change in administrations, we have seen a myriad of both executive orders as well as orders throughout most of the major agencies that make up the cabinet of the executive branch, and one of the major contributions thus far has been that many companies in prior years were very concerned about some of the capricious application of certain regulations, and because of that there was basically somewhat of subdued investments or curtailed investment under concerns over how certain regulations were going to be enforced and how regulations were to be deployed.

Certainly, we’ve seen as far as environmental regulations it’s been a very positive impact on many of the energy companies including many of our toll takers that are in the total return portfolio including some of our pipeline operators. We also are seeing further developments in some of the industrial and other branded companies that are getting a lot more regulatory certainty.

Now on the threat part of the equation, we still have some of the unknown unknowns that are still going to be out there potential threatening our portfolios and many of the individual recommendations. The first that has come very much to the forefront of the marketplace has been the threat of various tariffs and the actuality of proposed tariffs on many imported goods, targeting specific exporting countries and subsequently some of the proposed tariffs and other restrictions from countries that we have targeted as far as some of the proposal that right now is in discussion.

As we’ve seen, we’ve seen some dramatic sell-offs and some down days as well as some major turnarounds in the marketplace. Last week we saw some dramatic sell-offs particularly on the sixth as we watched some of the market react to some of the tariff discussions and the scenarios that may play out in various industries.

Yet today, before the U.S. opened, we had the speech coming out of President Xi Jinping of China at the Asia Regional Development Conference in which he basically stated that China is very open to negotiation in which they’d like to see less of a trade war. They see no reason to have a battle. They see it would be a no win for China. It would be a no win for the United States, and they’d like to see some further cooperation.

In fact, much of the laundry list that the administration has put forward as far as some of the concerns involving not only tariffs on imported goods coming into China exported from the United States but also many of the regulations as far as U.S. companies establishing themselves or expanding their industrial operations or production when it comes to ownership structures of individual plants as

well as intellectual property including plans and technology that has been forced to be shared and often times has been absconded with by some Chinese counterparts.

So, with this in mind, it’s still very much unknown, but my viewpoint now given my experience in dealing with the Chinese as I have professionally over the last many years both as a banker as well as a newsletter editor and as a professor at some of the Chinese universities in Shanghai, Chengdu as well as Shenzhen, I think this is a very positive development.

I think we’re going to more likely than not see the tariff issue is going to be much more under control and, therefore, add to much less near-term risk in the stock market going forward. Now it’s not to say that we’re not going to see some back and forth as far as negotiations and that we’re not going to see some further fiery talk, but I think we’re going to end up with some resolutions that’s going to end up creating much more stability and a much better environment for many of the companies that are in the United States as well as many that deal in the external marketplace.

The next major threat I see is the electoral threat. We have the midterm elections which are already well underway around the country and, therefore, there is some further discussion about how this might impact what we might see as far as administration actions as well as what we might see as congressional oversight of the executive branch as well as any sort of holdup in various legislation or in various appointees that might be coming down the pike from the administration.

Therefore, right now if you look at, and we’ll examine this in a moment ... the past general election created a deal of positive expectations for some of that regulatory certainty as well as for some of the tax policies that have come to fruition and, therefore, if we were to see a major change in that regulatory expectation, that would basically represent a threat, so I’m going to continue to monitor as I always do the ongoing developments that are happening on the election cycle.

But on a positive note, we’re looking at the overall S&P index continue a very strong upward march and, therefore, this is something that we’re still very much seeing that stocks are very much on track for what we’re seeing for some further gains. Now what you’ve seen of course is the first quarter is representing two of the major threats of the marketplace. There are concerns over the tariff battle as well as some further concerns as far as the direction of interest rate policy.

So, with that in mind, again that’s something that we’re going to be addressing in a moment, but in general terms I still think that we’re looking for some much further improvement for the latter part of this year, and I think just as Richard has mentioned in some of his journal writings and in the issues so far this year, I think we very well have seen that pullback that he was identifying so far this year. Therefore, if anything, I think we have a much better level of certainty going forward.

Now one of the cautionary notes that I would have to what I see as a fairly positive viewpoint in the marketplace is looking at what some in the marketplace are arguing is that stocks are arguably a better value. What you’re looking at right now is the price/earnings ratio of the S&P 500, and so what this graph is plotting is the daily price/earnings ratio for the S&P 500 index of stocks.

You’ll note this is basically going back through 2016, 2017 in which we saw the big run-up through 2017, and now we’ve seen the pullback where we’re coming closer in line where we were during the summer of 2016 when the market was going through another period of relative cheapness when looking at the price to earnings ratio. This was marginally around the same period of time in which

the British had voted to authorize the exit from the European Union, otherwise known as Brexit, which caused a softening of the marketplace.

The next part of the equation, though, is that this might very well be sort of a red herring in which the earnings themselves as I typically observe are something in which they’ve been very easily sort of managed over time. What I’d rather draw your attention to is looking at instead what is occurring and basically comparing the S&P 500 indexes, their price to sales ratio and the price to book ratio. These are something that I think is much more important in looking at when valuing an individual stock in the marketplace.

Now the price to sales ratio take the trailing revenues of the company or in this case the collective revenues of the companies in the S&P 500 and measured as far as what the value is relative to the price of the index or the price of the stock. Therefore, this basically is something we’re buying. You have a very clear understanding as far as what the revenues are and what the overall price of the collective market capitalization of the stock is. Therefore, it is a very clear and clean valuation of the company rather than the earnings which can be managed from quarter to quarter that don’t necessarily provide as accurate or as an apples-to-apples comparison within industry groups and within market samples.

The next part of the equation is looking at the price to book ration and, therefore, this is looking at effectively the meltdown value of a company and how it relates to the price of the overall stock that’s in the marketplace. So, for this we’re looking at the overall book value of the S&P companies collectively against the value of the S&P index. What you’ll notice in both of these sorts of examples, the overall growth rate of both the price to sales and the price to book is still very much heading in an upward bias. Yes, there’s a little bit of a pullback in both as we saw in the first quarter of this year, but it is not as dramatic as we saw in the price to earnings ratio.

So, this has given me a little bit of a pause as far as being able to make a grand prognostication that the market is still relatively cheap compared to where others are pointing to the price to earnings ratio which is, by their measurement, as looking at the market as still relatively cheap. The market still has a lot of value, but it is not as inexpensive as some are examining.

So, I’m getting a message that my sound quality is having an issue, so I think we’re going to try to disconnect and take a brief intermission and come back and reconnect. So, I apologize for the technical issues. So, we’re going to take a brief intermission and we’re going to reconnect and reconvene. Thank you for your patience.

All right, everyone. Again, my sincerest apologies for our problems. By the way, next month we’re going to be doing another webinar in which I basically plan on doing it in the office to avoid this problem going forward. So, we’re not going to do it remotely so it has some certainty with that. As I was detailing with the graphic I’m showing you in which the price to sales and the price to book value – which are both measurements that are much harder to be able to manage from a company standpoint – are showing that they are generally continuing on their upward march as opposed to the price to earnings average for the S&P 500 which is much more down and much more in line with where we were back in the last major dip during the summer of 2016.

So, this is basically a word of caution that we need to be careful as far as being able to not be overly enthusiastic that the market is not necessarily sort of a great bargain at the moment but that there are opportunities, but it’s not the screaming bargain that many people are trying to promote, citing the average price to earnings ratio for the S&P 500 shares.

So now we’re basically going to take a look at what’s happening on the bonds and the interest rate market. Now first and foremost, everyone is really concerned and focused on the inflationary conditions within the United States market. We already had some Fed activity as far as adjusting their targeted rate for the fed funds interest rate which is one of the benchmarks the banks effectively will use when gauging their borrowing costs as well as for troubled banks actually utilizing it to prop up their reserves on a daily or nightly basis.

But with that in mind, taking a look at the inflationary conditions, while we have seen some of the headline numbers for the consumer price index that has been in the two percent range, on the core basis we still have seen some relatively modest and controlled inflationary pressure. But also note that a much more accurate version of looking at where inflationary conditions are in the overall U.S. marketplace and the way that the Federal Reserve measures inflation in the U.S. economy, they don’t necessarily pay close attention to the CPI which is a basket of some individual items as well as a contrived estimate for what the implied cost of rent is or for housing as far as calculating an overall basket.

Instead what they basically use at the Fed and at the open market committee that sets the direction for interest rate policy utilizes is the personal consumption expenditure, or so-called PCE, and the PCE measures all expenditures in the consumer segment which makes up roughly two thirds of the overall economy of the U.S. The PCE is not only well below the two percent threshold that the Fed is utilizing as their warning signal that inflation is starting to rear its head, but it has also been on the decline for the past few reported months in which we’re actually seeing it sitting at the 1.6 percent rate for the core rate.

So, the end result is that inflation as measured by the broad expenditure of the U.S. economy is not really showing up with any major impact on the economy. More importantly, the Fed uses this exclusively for their determination of inflationary pressures and how they’re going to be setting policy. So, the Fed, therefore, is not seeing the pressure in the PCE, and that basically should be quite positive for what we see for the bond market.

Now the next two major portions of the bond market is not only where we see the inflation but what we are going to actually see from the Fed. Right now, the marketplace I think has fairly baked in what the Fed is going to do as far as bringing their targeted rates into the low to mid two percent range and, therefore, that’s just at a feds fund rate. Therefore, with that in mind, we’re simply moving into sort of a normalization or getting closer to a normalization for short-term interest rates.

Now some might basically argue that we might very well see a further or potential flattening in the yield curve which is typically an indicator that the market is potentially betting for a slow-down economy. In other words, that the Fed might be tapping the brakes too hard on short-term credit conditions and, therefore, slowing the economy and, therefore, driving demand by bond investors to buy longer-term securities to lock in those higher yields while they still can. That’s what it means when

we see an inverted yield curve. Short-term yields are higher than longer-term yields because bond buyers are trying to lock in rates before they start falling as a result of a recession.

But given the overall growth numbers that we’re seeing in the domestic economy and seeing the growth numbers which are also for the first time in some time syncing up with all the leading economies of the world are all basically in positive territory for domestic growth. It’s one of those rare circumstances where not only the U.S. is expanding its domestic economy but major European economies and the major Asiatic economies are also expanding their domestic economies as well.

So, the overall growth is still quite good, and the Fed is not necessarily seeing inflationary pressures. The other thing to keep in mind is what’s more important than the targeting of the fed funds rate is what’s happening with the bond portfolio that the Fed has been buying and holding for all of the past many years post the 2007, 2008 financial crisis.

That portfolio is not being unwound and, therefore, the Fed is going to continue to maintain its very robust balance sheet. It’s going to continue to simply allow maturities to occur and not buy new bonds as part of maintaining their portfolio, but it is not at this point planning on selling any of its portfolio. So, there should not be any downward pressure coming to the bond market in any of the holdings, whether they be mortgage, Treasury, corporate or other securities held by the Fed that are not going to be coming to the market. So that basically is a very positive impact for the bond market.

In addition, we are seeing very strong domestic demand for bonds across the various parts of the bond market. We continue to see fairly aggressive participation in the Treasury auctions. We are also seeing fairly good participation in the secondary markets not only for Treasuries but also for corporate debt.

One of the crucial parts of the dollar bond market is that the dollar bond market is not just about corporates that are issued in the United States, but they’re corporate bonds that are issued in U.S. dollar terms around the world. Therefore, we are seeing a tremendous amount of demand from some of these corporate issues in dollar terms by insurers, pension plans and others that need to maintain and expand their interest earning capability from their own bond portfolios.

Therefore, this demand from what I’m seeing should very well continue for the ensuring quarters. Therefore, I do not see a real rate or yield backup in the intermediate to longer-term bond market. With that in mind, I think that’s going to create a lot of relief for the stock market which is looking at bond yields as potentially being a warning sign, because if bond yields start to go up, that means the cost of borrowing for U.S. corporations is going to go up, and that’s going to put some pressure on their margins, and that’s also going to put some pressure on companies that might be hesitant to borrow to expand or invest in their companies.

Therefore, if we continue to see strong demand which I do for the corporate bond market and other parts of the bond market, that’s going to keep yields for the corporations and the interest cost for the corporations under control and, therefore, we’ll not be expected to see any major cost pressures on funding themselves by borrowing money in the bond market. Moreover, global demand for U.S. bonds continues to be quite strong. The Treasury on a month-by-month basis tracks the amount of holdings and the amount of purchases in sales by foreign private and central bank buyers and owners of bonds.

What we’ve seen is a continued strong demand for U.S. bonds by global investors including central banks, including governments, sovereign investment funds. These are funds that are owned by national countries that are invested to propel the wealth of their individual reserves that they might have in their country as well as private investment funds outside the U.S. or continue to see very strong inflows into the U.S. bond market and, therefore, that also is keeping yields well under control even as the U.S. Treasury is projected to have to increase their issuance because of the current budgetary deficit which is partially caused by the Tax Cut Act of 2017 but also from other increases in expenditures that have been taking place through various budgetary actions.

Therefore, we are not seeing any crowding out in the bond market by Treasury issuance. We’re not seeing any threats of crowding out in the Treasury market as it impacts corporate bond rates, and we are seeing strong demand which is mopping up a great deal of the issuance that’s already out there. So, all of this I think is generally quite positive for the bond market and quite positive for the interest rates particularly in the crucial intermediate to longer-term rates that many companies utilize to borrow money to fund their current businesses and to fund their further expansion.

Let’s look at where we are seeing some of the yield opportunities right now. One of the things that I always want to instill in readers is that if you’re looking at the bond market, when you’re looking at the U.S. Treasury market which is shown by the blue yield curve, these are yield curves that are plotting maturities which you’ll see in the lower axis against the yield as it relates to each of these varied segments. So, we have the blue line as the baseline Treasuries, and then we have on the red line are the U.S. municipal single A rated municipal bonds on a tax-equivalent basis, and we’re looking at effectively the U.S. corporate triple B rated corporate bonds.

So, what you’ll see is that the Treasury market effectively is the benchmark for perfection. The U.S. Treasury cannot get any better than triple A and, therefore, it arguably represents the greatest risk in any part of the marketplace because it is priced effectively to perfection. You cannot get a 4A Treasury bond, and so as a result as an investor, it really doesn’t make much sense unless you’re simply locking in something for a specific period of time with no credit risk. Instead what I see as a much better value is looking at the other facets of the bond market that offer yield opportunity.

What I mean by this is that if we look at corporate bonds that are not triple A rated or looking at triple B which is still investment grade or the single A which is slightly better, these would be the equivalent of buying a stock in the stock market that is not fully priced. We buy stocks because we see that they’re undervalued and are not recognized by the marketplace for their underlying value, and we buy that with the expectation that the market’s going to catch up and recognize that the company stock is undervalued and push the value of the stock higher. When looking at the bond market, we want to do the exact same thing.

So when looking at locking up some better yields, we can identify corporations that are issuing bonds that are lower grade than Treasuries with the idea that if the company that’s issuing these bonds are actually in very strong solid conditions and expanding their business and delivering to their shareholders, then the value of their bonds are going to be reflective of their improved business conditions and their improved credit conditions and, therefore, will more likely increase in price and potentially increase in their credit rating. So, by looking at this part of the corporate bond market, this is where we can have some opportunity.

It’s kind of like buying a growth stock early in the stock market and seeing it improve. The same thing that we can do in the bond market by buying into the corporate bond market of some of the lesser grade and, if I’ve done my homework appropriately for you, we’ll be able to see some market appreciation while we’re earning current higher yield, and we’ll see some appreciation over time. The other part of the marketplace which I think offers a lot of value, and you’ll be reading about this in the Dividend Digest in the issue of this week, is the municipal bond market.

The municipal bond market is one in which there is significant yield advantage over the treasury market, and there is a continued improvement in the underlying credit conditions across the broad municipal bond market. So, the advantages we have in this market right now is we can have higher yields in absolute terms to Treasuries and significantly higher yields on a taxable equivalent basis in the municipal bond market. Because the yield spread over the Treasury, in other words the difference that municipals pay over what the U.S. Treasury pays in yields is so much higher, it provides a lot more of a cushion for us.

So even if Treasury yields were to start rising, the municipal bond market might very well absorb that and might actually see some further improvement. So, they are potentially more defensive if we do see Treasury yields start to back up. If they don’t, they’re still offering a better value and might very well continue to improve and, therefore, that’s where in going forward the bond market is going to be providing a lot of opportunity for us, and we’re going to be looking at more of our fund holdings.

Going forward, I’m going to be showing you some individual securities that and some closed-end funds that are going to be providing some of these opportunities going forward in the portfolios of Profitable Investing. Now the one thing that we need to be aware of is that this is not necessarily a new occurrence, because what you’re looking at here is the spread between the corporate bond market – again I’ve shown you the yield curve in the last slide – and what the U.S. Treasury ten-year is yielding.

This is the spread. So, this is the amount or the difference of the higher yield for the U.S. corporate lower but still investment grade bond market minus what a U.S. Treasury yields. As you’ve seen from back in 2016, that spread was over two percent and well above two percent. Subsequently through 2016 and ’17, as the economy continued to see further improvement and particularly more dramatically through 2017, that spread has hit sort of a near-term bottom as we moved into the first quarter of this year, bottoming out at about 1.2 percent.

Now we’ve seen a little bit of a backup, and so what I’m seeing here is that a lot of people have been focused on the opportunity in the corporate bond market, and a lot of investors, fund managers, governments, sovereign investment funds from around the world have been buying into U.S. corporate debt and, therefore, driving those yields lower and lower.

We saw a little bit of a backup in that recently with some of the fears over the tariffs potentially impacting some of the corporate borrowers. We some saw fears as far as how the Fed’s activity, if we’re overzealous, might impact some of the corporate borrowings. But as I mentioned earlier, I do not see the tariffs entering into a full trade war, and I see further negotiations that have already been successful with some of the countries with the U.S. including South Korea, including with the European Union and now being proposed by President Xi with China and with some other nations in which I think we’re going to see the threat to the tariff hike going away.

I think this is going to be quite positive for the corporate bond market. It’s going to create more certainty that these corporations are going to be able to fund themselves with further sales and not be interrupted by some of the trade war issues, and as I mentioned earlier with the Fed not necessarily having to take Draconian actions, not reversing and selling off their massive bond portfolio, I think you’re going to see the U.S. Treasury market is going to remain fairly steady, and I think you’re going to see a resumption in the progress of the corporate bond market and, therefore, the corporate bond market has been quite successful. I think we’re going to see that success continuing.

Now let’s start looking at some of the individual facets of the stock market, and we’re going to see how I see some of these things sort of playing out for some of our core holdings throughout the portfolios. Now the first part of the area I want to look at are the banks and the financials. Now what you’re looking at in the graph in the lower right-hand corner is the actual Standard & Poor’s Banks Select Industry Index.

So, this is basically looking at the leading banks within the U.S. marketplace on the stock market, and you’ll see it was sort of bobbling along through the last several years until the election day of 2016. This was basically a major event that was unforeseen by many analysts, but afterwards the market effectively recognized that we were going to be expecting to see some major changes as related to regulatory issues for the banking sector.

Now we’ve already talked a lot about what I see at the interest rate environment for the U.S. is going to be much more subdued and not as aggressive as some had forecast and that most of what the Fed is already planning on doing is I think fairly well baked into the bond market and interest rate market, and I think that’s quite positive for the banks and the financials because it gives them much more certainty as far as being able to manage their loan portfolios and to set their lending rates for particularly their corporate borrowers.

But more importantly are the regulatory changes, and so the regulatory changes are quite important because following the financial crisis of ’07 and ’08, there were a number of regulatory actions that took place that really made running a bank particularly as a commercial lender very expensive and very ponderous to do. Many banks effectively not only had to adhere to the new rules, but they had to employ an army of compliance experts that would review and go through each and every of the new loans and the clients, not only slowing down the lending process but adding to the cost and complexity of completing lending deals.

So as a result, a lot of corporate lending that was taking place in the U.S. was curtailed dramatically. This not only had a detrimental effect on business investment and business expansion but also had a detrimental effect on the general market and particularly on the banks and the financials that have been sort of encumbered by this.

So with some of the rollback from some of the regulatory requirements by the U.S. Treasury under the current Treasury secretary as well as discussions coming out of the Federal Reserve today in which the Fed is going to further enunciate some of their reforms and ease requirements on some of the capital for banks, banks and financials are probably one of the better areas of the marketplace to see some regulatory relief and be able to cash in on this and be able to expand the base of their lending portfolios and to, therefore, make further loans, improve their margins.

Now one of the things that I’ve been looking at and I always have looked at for banks is their efficiency ratio. This is the rate in which the amount it costs relative to each dollar of earnings that a bank makes, and so putting it in perspective, we have a collection of banks inside the portfolio. We have Citizens Financial. We have Toronto-Dominion. We have Wells Fargo, and these banks are seeing efficiency ratios that are in the 60 plus or higher ranges. This means it’s costing some 60 or more cents to earn each dollar of income for the banks which is traditionally quite expensive.

That’s why the earnings of the banks have not necessarily been as high as they might otherwise be in this generally positive economy. So, with some of these regulatory changes and reforms and some of the eased compliance costs, we should expect to see the operating margins of the banks improve, and we’re going to start seeing this show up with improved efficiency ratios for the banks which, if we could start to see efficiency ratios start to fall towards the 50 percent range and hopefully less, that’s going to show that the profitability of the banks is really starting to hit home.

So I think the progress for the banking stocks is just getting going and, as I mentioned earlier, we’re going to start looking at some of the first quarter returns that we’re going to be seeing later this week for Wells Fargo and for other banks this week and next and, therefore, I’m going to be looking for where they stand on their operating margin and where they stand on their efficiency ratio and then, most importantly, on their guidance for where they see their costs and their business expansion as they head into the second quarter and beyond.

For right now, I think there’s going to be a lot more further progress. Therefore, the other banks that we’re holding I think are fairly well positioned. The only caution I would have is with Wells Fargo in which they basically were hit with yet another fine for some of their past challenges and some of the potential or alleged abuse of some of the client book of business.

While there’s been a shakeup in the management of the bank and arguably a shakeup in many of their policies, what we really need to be looking for going forward is some proof that their actions are truly being taken not only to conduct themselves in an appropriate fashion above the rules and regulations, but also can they still build and expand a book of business both in their banking business as well as their asset management business to justify owning that stock? So that’s what we’re looking at very closely as we go through the quarterly number as well as their guidance that we’re going to be getting in a few days.

The next part of the marketplace that I want to draw your attention to are the consumer brands. So, we have a lot of discretionary and staple branded companies in the portfolio. As you look at the graphic down in the lower part of the chart, you’ll see that this has been a fairly successful area for the marketplace that Richard basically has placed a lot of some quality companies into the portfolio.

So, we have companies like Hormel. We have Kimberly-Clark. We have Mondelēz. We have General Mills. We have Kraft among others. Therefore, these companies we’re basically betting on that strong consumer that I talked about earlier, the rising wages, the rising employment, the overall pool of people with money in their wallets that are willing and able not only to spend for the basic necessity but spending for additional goods as well and therefore helping to effectively expand the revenues for this crucial part of the U.S. marketplace.

Now all that being said and aside, that all has been quite positive for these companies, but at the same time I want to draw your attention to what I’ve been looking at has been some of the brand challenges. So, the challenges to these branded consumer goods companies are coming from two basic areas. One is the underlying cost of the business. So, we’ve seen a lot of rise in some of the input goods for some of the food stocks that has been increasing the cost of production and, therefore, decreasing and threatening some of the margins for some of these companies.

The other part of the equation that’s adding in the cost are the transportation costs. The trucking and rail industry is already stressed. There are shortages in various parts of the country for employees to operate the trucks, to be able to run and deal with rail systems. You might recall that last year there were major bottlenecks in some of the rail terminals and some of the rail routes that caused some further slowing, and we’re still seeing some further sort of change-ups in scheduling for rail traffic.

The result has been that trucking rates and rail rates have been increasing at a dramatic fashion, and this is cashing out many of these consumer branded companies and, therefore, it’s putting a squeeze on their margins and, therefore, we’ve seen some pullbacks and some selling in some of these stocks including we’ve seen in Kraft Foods that some of you have been asking about. We’ve seen some impact in General Mills, and we’ve seen it in some of the other consumer things.

The other major challenge that I’ve been observing is that the power of some of the long-held strong brands is not as strong as it once was. In other words, there are newer competitors out there. There are some of the store brands that are in some of the grocery stores and some of the chains.

Whole Foods, for example, has been very successful at utilizing their own brand, of the 365 brand, and have been able to capture sales at an increasing pace within their stores. You’ve also seen Ahold and its various subsidiary grocery companies also increase in the quality of their own branded goods and, therefore, competing successful against some of the traditional brands coming out of the Kraft, Heinz or the General Mills or the Mondelēz.

Then you’re also seeing some other more boutique brands that are coming to the marketplace, capturing a particular niche and attacking some of the broader brands and, therefore, this again is a major threat to some of these otherwise very good bets on a growing and expanding economy and a growing and expanding consumer, but it might not necessarily be the best position for us to have as many of these companies in the portfolio that are suffering on the cost side and are suffering on the competitor side. So, I’m reviewing those right now, and you’re going to see more of this discussion in future journals and in the pending next issue of Profitable Investing.

The next part of the marketplace which has seen some selling into the first quarter is one that I see as being one of the better opportunities for individual investors and one for the current issue of Profitable Investing I provide my own section within Profitable Investing discussing how I saw the REIT market benefiting and being really undervalued in the current marketplace after the recent sell-off that we had starting right at yearend. So, there are a couple things that we need to address as far as the rationale for why we’ve seen the cheaper prices in some of these very high-quality real estate investment trusts.

The first part of the equation is the interest rate question. A lot of investors have been eyeing the Fed and looking at the Fed is going to tighten and that interest rates are going to go up and that

might very well go up in a dramatic fashion and, therefore, real estate investment trusts which often times are used in portfolios as almost a bond surrogate are often times sold because they represent that greater amount of risk, that if interest rates go up and the REITs and the value of the REITs’ underlying portfolios will go down in an inverse fashion.

But as I argued earlier in this conversation, inflation is measured by the broader PCE, or personal consumption expenditure, at the core actually has been dropping in the ensuing months and is nowhere near a threat threshold of the two percent as the Fed is looking at and as I am looking at. So, there’s not an impending doom for an aggressive action in short-term interest rates.

In addition, as we showed earlier, the idea that there are still many opportunities where people are eager to buy higher interest rate-paying investments, and REITs right now represent one of those great bargain opportunities much like we’re seeing in some of the corporate bond market. So again, offering a higher yield and now, because of the market action, even a bumped-up yield while they have these good quality underlying real estate assets generating all that cash.

But what really has impacted the REITs market much more so than the interest rate risk was the Tax Cuts and Jobs Act changes from 2017, and here’s why. So, when the corporate tax rate was cut from the 35 down to the 21 percent, effectively owners of real estate investment trusts that have been taking advantage of some of the tax benefits that REITs provide no longer saw as an advantage to owning them.

Therefore corporations, particularly insurance companies, pension investment companies and other financials that are major buyers within the REIT segment saw that it would be more beneficial for them to own other corporate assets, land for the REIT assets and, therefore, banks, insurance companies and so forth basically sort of stepped away from part of this marketplace and that has created a bit more of this selling pressure.

But for an individual investor who is still paying the higher effective tax rates, having the REITs in the portfolio without the double corporate taxation issue ... because the distributions are not taxed first at the company; they’re only taxed on the investor level, and even then, some of the depreciation and so forth protects and shields some of the income distribution or dividends paid by the REITs are still going to be effectively paid at the lower rate.

But the Tax Cuts and Jobs Act also has an additional provision which also provides a deductibility for effectively 20 percent of the dividend flow from your tax liability. So, a portion of the distribution, in other words the dividends paid by the REITs for individuals, is actually going to be deducted from your overall tax base. So effectively part of the dividend is going to be tax free because of the Jobs Act, and that is something that has not necessarily been fully recognized in the marketplace, and that’s why I think the REITs are really advantageous for individual investors right now to start buying into, so the idea of looking at some of the favorites we have in the Total Return portfolio.

W.P. Carey is the sale of lease-back company. It offers a tremendous value and a dividend which is well defended and continues to increase quarter after quarter after quarter as it has done for many years. Digital Realty Trust. This is the company that around the nation is providing the data servers and processors and data storage for all of the cloud computing that has been increasing in demand. They have very strong pricing power for their tenants, and again their dividend is well defended.

We also have the Healthcare Realty cashing in on the further evolution of how health care is provided in the marketplace away from the hospitals, more towards outpatient care, more towards office centers where there’s much more certainty, much more control over the costs and much more certainty as far as the rents for health care.

Then of course we have one of the further success stories that’s bucking the trend for retailers in Tanger with their Tanger outlet properties – which again Richard wrote about and I reiterated in the current issue – is really able to cash in on the demand for consumers to go outside of urban environments seeking bargains, and they are making destinations at Tanger’s malls, and Tanger is well capitalized and is able to generate the well definitive, and again all of these basically represent in my mind very strong opportunity for you to buy right now as individual investors that only takes advantage of the correction that I think has been overdone by interest rate fears, but also takes advantage of the tax deal that was written very specifically for individual investors that gives part of the distribution effectively to you tax free. Therefore, that’s why I think these are a great bargain right now.

Now the next area is another part of the marketplace that has been harmed by the tax code, but again there’s a difference between an institutional investor and an individual investor, so much like I mentioned with the REITs. So, the tax change meant that the corporate tax rate for let’s say a regular oil company or a traditional corporation rather than a pass-through or a master limited partnership went from 35 percent down to 21 percent and, therefore, corporations themselves recognize that they don’t necessarily have to be in that MLP space in order to be as profitable and that some of the tax savings weren’t necessarily worth that sort of structure.

Therefore, we’ve seen some movement away from the institutions being in this sort of space. The institutional investors that don’t get the same sort of benefit that the individual investor gets from the tax code means that they basically have stepped away from this market as well. So, what you’re looking at in the graphic below is the overall total return for the Alerian Master Limited Partnership, or MLP, Infrastructure Index total return. So, the infrastructure index looks at the pass-throughs that make up our toll takers in the Total Return portfolio.

So, we have Buckeye, Enterprise Products, KMI and Plains among some of our primary toll takers. So, these basically have seen the correction and, therefore, some of the selling by institutional investors that are not getting the tax benefits as they once were but as individual investors you’re taxed at still in many cases 35 or more percent effective tax bracket means that the distributions from the pass-throughs and the MLPs are still very advantageous for you.

Effectively these are not paying corporate income tax, so there’s no double taxation of the dividends that are paid out, and the dividends also get paid with the pass-through of the deduction including depletion allowances, including other sorts of depreciation on the underlying assets. Therefore, these deductions shield a portion if not all of the distributions and therefore means that you have reduced or potentially eliminated current income tax liability.

Now of course this in turn reduces your cost basis on these underlying securities. Therefore, when you sell, that reduced cost basis means that you may have to pay either a capital gains tax or a higher capital gains tax, but given the lower effective rate for that and for the deferral, deferred tax is always a tax saved.

The other positive thing about this which you are probably aware of, if in fact you own these in your estate and you pass on, the effective cost basis clock is reset and, therefore, there would be no capital gains tax that would owed on these because effectively the tax base or the basis is reset to zero. So, these can also still be used effectively for individuals that would hold these upon their passing in their estate. So institutional investors? These are not a bargain for them, so the tax code changes, but for individual investors the pass-throughs and particularly the infrastructure toll takers basically are strong opportunities for us.

Alongside this looking at the further expansion that we’re seeing in demand for natural gas exports and some of the further regulatory changes with some for the potential for increasing petroleum exports means that the pipes and the pipelines that we have in the toll takers are also should be expected to see some further income gains over time. That should basically translate into higher distributions meaning higher dividends. So again, these are great for individuals, not so great for institutions. It means they’re great for us in our portfolios right now. Now the next major group I want to address is another area that has come under some selling pressure into the quarter but also represents a great buy, and that’s in the utility segment. So much like we’ve seen with REITs and much like we’ve seen with some of the other interest rate-sensitive parts of the marketplace, after we got to the beginning of the year and the expectations that the Federal Reserve and the Open Market Committee were going to start changing their target rates for interest rates for fed funds, and that the fear was we were going to see not only the Fed more aggressively increasing rates but that we were going to see bond market rates start not just inch up but jump up meant that utilities which often times are perceived as a bond alternative would trade in an inverse fashion.

So, interest rates go up in the bond market, and utility prices and their stocks would go down. That’s what we’ve seen toward the end of last year and the beginning of the first quarter. So as a result, many of the utilities right now do basically represent some very good buys right now. So, the interest rate risk I think is much more muted than what has been baked into the marketplace.

We are not seeing any broad inflationary pressures as measured by the core PCE index. We are seeing the Fed does not have any pressing need to aggressively change course in interest rates. We see no reason for the Fed to make any dramatic changes in their portfolio of bonds that they are continuing to own and not sell. Therefore, the idea that there is not interest rate pressure and, therefore, I would argue that the sell-off we’ve seen in the utilities has been overdone.

The next part of the equation is that we have our domestic and we also have some of our international-focused utilities. So, we have the PPL with its Florida properties. We have NextEra with its additional properties including its renewable sources. These basically represent some positive higher growth markets. Basically, I would be projecting that revenues are still very much on the ascent and that we might very well see some further progress. PPL, though, does have one underlying threat that I’m looking at not just for it but for some of the other utilities in some of the areas of the country where solar panels are being deployed and could be deployed with a high level of certainty.

So, for households that are deploying solar panels, it represents the potential drop-off in demand from the grids from some of the utility operators. With this drop-off in demand, that means that if individual households are generating more of their energy by utilizing their solar panels, that means they’re not necessarily pulling from their local power company, and/or they also get to sell some of their excess power to the power company. Therefore, that’s not necessarily profitable for the power

company and that’s one of the existential threats that I’m going to be looking at going forward, but right now given the market sell-off and the overreaction to the interest rate environment and given the strong demand that’s still fostering revenue growth for our domestic utilities, I think they represent some very good buys right now.

On the global front, again looking at our SSE plc, again we had seen some concerns in the UK economy as well as in the British market on the sudden development with the election results for the Brexit yes, and we also saw further concerns as negotiations with the European Union and specifically the European Commission was not necessarily going all that well.

That has largely been coming to a much more successful conclusion. There is now a great deal of optimism that the final deal within the works for Britain’s exit from the European Union and continued trade policies as well as its bill to settle its affairs with the European Union is all coming to an amicable close. So, this might very well continue to offer some further certainty that’s returning to the British market. We’re also seeing some further recovery in the local British economy, and that also is going to be beneficial for our utility holdings in that particular marketplace.

So, I think again like what we’re seeing in the REITs, like we’re seeing in the pass-through marketplace, these markets have been sold off in the first quarter I think for some specific reasons. Some are not necessarily justified, and some are only justified by institutional investors but really represent great buys now for the individual investor, and that’s why I think I would draw your attention to these inside the Profitable Investing portfolio.

So, with that I greatly appreciate your time and your patience with the technical issues with the webinar, and so I’d like to start to address some of your questions that you have been sending in. So, the first one I’d like to lead off would be from Richard that basically writes to us, “What are the differences between your philosophy and those of Mr. Band? Can you tell any details on how your recommendations might differ?” Well, Richard’s question actually is quite common with many others that you have sent in about the changes and any difference between Richard Band and myself.

I think one of the crucial things that Richard Band and I are different in which I’m much more eager to book profits and to sell items to book profits than I think that Richard Band has experienced in recent years which I think he’s been more content to maybe wring out a bit more from a holding. Also, I think the idea as I mentioned earlier as far as the process and the objectives that we have for Profitable Investing is the constant review of the individual holdings with the idea that, would I want to buy the investment all over again? Would I want to buy the stock at that company, buy that fund, buy that bond all over again, and up to what price?

If I can’t, then I need to move to sell it and to find the next best opportunity for you to buy into and, therefore, I think where Richard and I differ a bit in which I think I can be a little more demanding on some of the individual portfolio holdings and, therefore, if something’s not working out and I see very specific reasons why things are not working out, then I’m going to look to sell something unless the company can really prove to me that it what it takes to be able to reverse some of their challenges or to reverse the market price action.

So those would be some of the things that are different, but fundamentally Richard and I are very similar when it comes to the fundamental analysis. We pore through the market information. We

pore through the companies’ income statements and balance sheets. We look at what’s happening in the marketplace. We look at what’s happening in the economy. We look for product developments, and we look for some of the major trends that are occurring in the economy, and we always identify the best opportunities to cash in on those and particularly those that are focused on the dividends. In that respect we’re quite similar, but I guess from my perspective I think I might be maybe a little more demanding when it comes to taking some profits as well as selling if a company is not really proving to me that it has what it takes to be able to reverse some of the challenges.

So, then the next question we have from Elizabeth in which she asks, “Are you following gross output as a leading indicator of market direction?” To Elizabeth and to the rest of the subscribers, yes. We’re always looking for the overall production and what’s happening in the economy. So, if the economy is expanding and we’re producing more goods and services, that’s obviously a positive indicator for the health of the economy. It also is a positive indicator that the underlying companies are going to be able to be profitable.

Therefore, as we continue to see I think some of the benefits from the tax changes in the U.S., I think it’s going to help to have a little bit more buoyancy for business reinvestment. We’ve already seen some improvement in business fixed investment. We’ve seen improvements in capital expenditures for business which I think is going to be translating into some further domestic production. We think we already are seeing some positive movements in the consumer. So, I think the U.S. economy is going to be in the positive. I think it’s going to be very helpful to continue to push the overall stock market much higher.

Now the next question that we’ll do is I’m going to take one from Robert. So, he asks about dividend growth investing. “Your thoughts on it and what degree it will impact the management of the various portfolios.” So, to Robert basically I would answer that dividends are very important for me in which I always would prefer for a company to pay a dividend over let’s say doing a share buyback. I’d rather have the cash paid to us in the form of cash and, therefore, the company has to earn its justification for why we would want to add to or reinvest in more shares.

So yes, dividends are very focused, and then I think what you’ll be seeing going forward is you’re going to see some additional higher dividend-paying investments that are going to be showing up in the Niche portfolio for Profitable Investing as well as showing up in the Total Return portfolio. You’re also going to see some higher dividends in some of the newer closed-end funds that I think I’m going to be presenting to you in coming issues. So, dividends are very important, and I think I’m going to be looking for more additions of some higher dividend-paying investment. They’ll be coming into the portfolio.

Now the next question I get from Edward. “Do you agree with Richard that a large correction is on the horizon for late ’18 and early ’19, and what indicators should we watch closely?” Well, as Richard has already talked about prior to my coming on board, we’ve already seen kind of a dire correction that has occurred so far in ’18 with some of the fears over interest rate trends and then the fears over some of the tariff battles that was occurring. Therefore, I think we’ve seen that bit of a pullback providing some of those good buying opportunities, some of which I just talked about with some of the REITs, some of the pass-throughs and some of the other parts of the marketplace.

But I think one of the key things that I’m going to be looking for going forward would be if we start to see a slowing in the economic development and the production which I mentioned just a

moment ago in one of the other answers. Do we start to see tightening credit conditions? Do we see tighter credit conditions for individuals? More importantly, do we see tighter credit conditions for companies to borrow? If we start to see a squeeze on credit, that would be an indicator I think that the stock market will more quickly start to react to that. So, I’m going to be looking for what’s happening on the credit conditions.

I’m also going to be continuing to follow what’s going to be occurring for trade flows as it relates to tariff negotiations because it still has to be resolved, although I think we’re going to see that resolved in the positive. But I think overall, I’m going to be looking for credit conditions and if we’re going to see any threat there. We’re going to be looking for the overall further business investment as it relates to the domestic economy, and I’m going to be looking for how we see further trade investments in and out of the U.S.

Therefore, I think for right now I’m fairly confident that we’re going to see 2018 is going to be a positive year, and for ’19 the only major thing that I’d be looking for with concern may be electoral changes that might threaten some of the regulatory certainty that many companies have been cashing in on.

Now the next question I will address is coming from Dean in which Dean asks, “Has gold set its bottom, and how will it react to inflationary concerns?” Well, again as I mentioned in the presentation, we really don’t necessarily see inflation in the current data that we’re seeing. The core PCE index is not only well below that two percent threshold, but it also has been in somewhat of a reversal from its recent peaks. So, the inflation really isn’t necessarily showing up in the broad consumer economy of the U.S. marketplace.

Again, we are not necessarily seeing inflation in some of the major economies on a broad scale outside of the U.S. Therefore, from an inflationary pressure standpoint, gold shouldn’t necessarily get much of a boost from that. Gold might very well see some progress if we see some further volatility risk, if we see some further political risk outside of the United States. That’s where I think you might see some demand, but on the surface and going forward, I don’t see any pressing reasons for why gold might see some further dramatic improvements.

So, the next question I’ll get from David is, “How do you research and evaluate a stock, and do you own a stock before making a recommendation?” So, I’ll answer that second part first. Now, no. I by policy and by policy of the publisher will delay any purchase I will have until after a period of time in which you’ve had ample opportunity to buy the stock before I do, and if I happen to own a stock that I am writing about, that would be disclosed on the website, and you can see it very clearly what I have.

So, from that respect that way I’m not going to benefit from any recommendation any more or less than what you would going forward. I want to make sure that you have the opportunity to buy the stock first before I will.

Then as far as how do I research, I kind of addressed that at the beginning of the webinar in which I focus very much on the fundamental conditions of the economy and come to sort of a top down decision and find the best companies that are growing their business and growing their margins at a faster pace than their peer group. Then I often times will find a company that pops up on its own, and

again I’ll want to look at the revenue growth and look at cost controls. I’m going to look at how their margins are improving as far as being able to be an identified company.

More importantly, I’m also going to turn around and evaluate it from a credit standpoint, because as a former banker and former underwriter, I’ve always basically said if I wouldn’t loan money to a company, I certainly won’t buy its stock and, therefore, that’s I think one of the things that sets me apart from some of the other newsletter editors in which I do have that credit background which I review and evaluate a company first on its income statement and secondly on its balance sheet and its credit standpoint.

So, the next question I get from Robert is, “How is risky is the China economy and, hence, Chinese stocks?” Well, I think that the risk is significantly less than what it has been of recent. The recent People’s Congress which basically goes through the governance for the next term of China basically reiterated that Xi Jinping is going to continue on with its reforms. There have been some further movements to sort of claw back some of the more aggressive leveraging of some of the major financial firms and other non- financial firms, and there have been some sales and cash raising from many of the major significant companies that have far-flung holdings including a lot of U.S. direct investments.

I think the risk from Chinese financials has been reduced. I also think that there is some further stability across some of the various sectors of the Chinese marketplace. Therefore, I think the Chinese economy is going to be more stable, and I think Chinese stocks are going to fare better. Also, I’ll draw your attention to one of my recent journals in which I talked about one of the companies that is one of the holdings for one of our newer funds – the Baron Global International Growth Fund, the BIGFX fund that we recently added to the portfolio – is Tencent.

Tencent is one of the leading online commerce and gaming and communications companies that along with Alibaba really dominate a lot of the tech world not only within the Chinese market but the regional market and increasingly getting a foothold in other parts of the world. Therefore, I think there are a lot of opportunities for some of these large, very technically savvy and well-capitalized companies. If we can cash in on these with some of our mutual funds and, in some cases, with some individual shares, I’m going to be bringing those to you in the Profitable Investing portfolio.

So, the next question that I have from Barry is, “If you have to buy one MLP, which one might it be?” Well, as I mentioned earlier, the pass-throughs and the MLPs I think are a great bargain buy now, and I think one of the most credible ones and one that has one of the longest histories of being very shareholder-focused would be Enterprise Products, so EPD. That would be the one that I think I’d want to start with if I were to single out one within the Total Return portfolio to get started with. That would-be Enterprise.

Next question I get from Anthony is, “I’m sticking with Teva. What are your thoughts?” Well, Teva’s got two major problems. One is the challenge of the generic drug business. Generics have been coming under both pricing pressure as well as some pressures from some of the existing owners of the patents that Teva relies upon and some of the negotiations with some of the existing companies which historically Teva was able to deal with quite successfully at negotiating some of the patent rights for some of the existing older drugs coming off of their patents.

Those have been challenged and, therefore, that’s putting some the revenue pressure on Teva as well as some of the growth prospects. But more importantly are some of the cost control issues with Teva. Their margins are really being tested, and so we’re not seeing an improvement in operating margins. We’re actually seeing some compression in some of the margins from their business. So, the end result is that I think Teva is going to be under pressure, and I am reviewing it, and I’ll be giving you sort of a better rundown in one of the coming issues of the journal and one of the pending issues of the main Profitable Investing newsletter.

Now the next question that we have is coming from Greg. Greg asks, “Is GE a long-term hold to see if it recovers? Many calls to fall below ten but it seems like selling out would just be locking in losses.” So, the key thing is that General Electric has been in a standby within the Profitable Investing portfolio, but I’m increasingly seeing General Electric as being something that is not necessarily going to see itself worked out in the near term. The original sort of guidance as far as how the company was going to reorganize itself into the primary drivers of the transportation, the health care and the energy segments and so forth, it seemed very positive as far as trying to focus better attention on the core businesses.

But at the same time, GE still has some of the legacy issues with its financials. It still hasn’t necessarily come up with a game plan as far as why does it still have such desperate groupings of these unrelated companies? Why do they fit together under one roof and under one management team? Therefore, the argument that I see that’s being made to break up or sell off more of the assets in GE to unlock more value to shareholders I think is becoming much more compelling.

So, it certainly doesn’t make GE a buy for me right now given that management seems to be reticent to go along with such a plan. If it were wanting to go along with that plan, then I could see some value in buying GE and be able to cash in on the cash proceeds or potential spin-off for each one of these units so that effectively each one would be a standalone business rather than grouped together in a conglomerate. So, I think GE has a lot of challenges right now.

The next question I get is from Thomas. “Is there an update on Ventas, symbol VTR, recommended earlier this year by Richard Band?” Well, the key thing with the senior housing and related company is that like the rest of the real estate segment, it basically got sold off regardless of what was happening in its underlying portfolio. Therefore, the overall REIT segment is I think one of the better values for individual investors to buy right now and, therefore, I think that it’s still very much undervalued.

Moreover, in looking at the demand for senior housing and other related senior health care real estate with the population going through a demographic shift, I think that their constituents that they are basically providing the property investments for is only going to further increases and, therefore, I think Richard’s original assumptions are still there. I think like the other REITs and real estate-focused investments, I think they’re still a good value right now because they have been sold for the wrong reasons, and they have been sold by institutions, and the individual investors I think are getting a much better buy right now.

The next question I get from Jerry. “There’s nothing been said about Richard Band’s utility recommendations in months.” I think the key thing as I mentioned earlier with the utilities is that there’s been an overreaction to rate and the idea that it’s not necessarily looking at sort of the overall

performance. So, I think the utilities do present a very good value right now both in our domestic front as well as some of the ones we have outside particularly in Britain. So, I think the idea of having utilities I think is another one of the areas where we’re getting a good bargain buy right now.

Next question we have from Bernie is asking me about the safety of AbbVie and Magellan Midstream Partners, dividend and growth.” Well, on Magellan again being within the MLP and the toll taker part of the marketplace, I think it represents a good value right now.

Then as far as potential growth in the Midstream and the pipeline part of the marketplace, I think it represents a great deal of value as the overall economy is going to continue to further demand petroleum products with further growth and, more importantly, with the export of natural gas in the form of LNG as well as other pipe into Canada and also into Mexico under current regulatory things and a further expansion in the number of LNG terminals and the amount of LNG shipments to markets outside the U.S., I think the pipeline market is going to see some further improvement.

So, I think the idea that we are going to see some further growth, and I think the dividend is going to be well protected. So, I think it’s like some of the other toll takers, a good value right now particularly for the individual investor.

As far as AbbVie, again a couple setbacks in some of the drug trials, but we still have a number of things in various stages of their product pipeline. The revenue source from the mainline drugs and the variations on the Humira, the autoimmune fighting drugs, is still carrying much cash that continues to fund their further development. That being said, AbbVie is one of the few successful dividend payers in that segment to be able to continue at some of their higher rates. I think that given some of the near-term setback, I’m getting a little concerned, but I am watching it very carefully, and if see something further, you’ll see a write-up in the journal going forward.

Next question I have from Perry in which he asks the dividend.com site that he mentions indicates that W.P. Carey dividend payout might not be sustainable in which the dividend for a period of time back in the early teens had increased by some 80 percent. “What are your thoughts?” He also says, “Congratulations on your new role.”

Thank you, Perry. So W.P. Carey is a company that I’ve known firsthand in the investment markets going back to when it first came to the public market back in the ‘90s, and I knew the founder, William Polk Carey, and so I have a fairly good understanding for their business model. I would agree with W.P. Carey’s management that their dividend is well defended, and I would project that it will continue to increase going forward as it has done over the last many, many quarters since coming to the public marketplace.

The key thing with Carey is that it continues to make acquisitions from companies that would like to liquefy their property portfolio that’s sitting on their balance sheet, and then they turn around and lease them back on long-term triple net leases which means that the leasing company, the Fortune 500 companies, government properties as well as governments outside the U.S. are effectively selling and buying back or selling and leasing back their properties and have to keep on maintaining them, paying the taxes and everything else and, therefore, W.P. Carey simply cashes in on liquefying those properties. Therefore, during more challenging times they get bargains, and during the more robust times they get to increase their rents.

So, I think W.P. Carey has a great business model, and they’ve proven themselves for many years to be able to defend and improve that dividend, so I think their dividend is well defended. I recommend it as being one of the better buys within the REIT segment. As we talked about earlier, it was already sort of sold off for basically unjustified reasons for interest rate risk and also sold off by institutions which makes them much more appropriate and appealing for individual investors right now.

Next question I have from Cecelia. She asks, “Do you like blockchain companies?” Well, you won’t see any of the blockchain companies in Profitable Investing, and if you look back at some of Richard’s journals talking about blockchain and some of the crypto coins, they very much echo my sentiment. Again, in my prior life as a banker back in the ‘90s, we created effectively one of the first digital coins, a coin called e-cash which was actually backed up by actual deposits and reserves in the bank. So, it was a physical currency that basically traded through an encrypted key.

So, I understand the mechanism for having an anonymous and seamless payment system and having an appropriate accounting system that makes sure that the coin is actually worth something. Blockchain and the cryptocurrencies don’t really provide an ease for exchange because you have to use intermediaries, and there’s a cost involved so that doesn’t make it an ease for use as a currency.

As a store of value as we’ve seen, it’s very challenging to get a true and stable value. Moreover, the costs of blockchain continues to increase because once you start a blockchain whether it’s for accounting or whether it’s for a currency, you have to keep that record going into infinity which means the power consumption to keep that record humming along only gets more and more and more demanding.

Therefore, as we’ve already seen in certain blockchain coin operations in mainland China where power was basically somewhat cheap, many of the regional and the national government has actually forbidden any further and actually restricted power access to some of the blockchain operating companies because of the power drain on the grid. Therefore, I think that while conceptually it makes sense, for right now I would be avoiding them and also be avoiding the companies that are involved in this just as Richard has been recommending.

Next question I get from Karen. “Any stocks we should be selling and raising cash?” Well, I’m very concerned over a number of some of our consumer goods companies, and I’m going to be coming to a conclusion on those. Also, I’ll be looking at Wells Fargo with their quarter results and looking for the guidance going forward because we’re in a very positive environment for banks, and if Wells can’t capitalize on that, then that’s not necessarily justified.

So, I’m going to be very critical at every one of the holdings we have, and if there are profits that we need to take, then I’m going to instruct you to take those profits on some of these stocks and raise some cash. If a company can’t prove that it’s going to be able to capitalize on positive news, then I’m going to recommend some sales. So again, you’ll see those in the journal and in the issues going forward.

The next question I get from Dennis is, “Both you and Richard caution about owning REITs in IRAs because of the built-in tax advantages. But however, if an IRA is the only investment vehicle used aren’t REITs, is it still a good investment with relatively high yields? That’s why I’ve owned them so far.”

Well, again within an IRA the REITs basically do have a great deal of tax benefits. Therefore, the idea that you don’t have a double taxation of the dividend, in other words the individual REIT company doesn’t pay income tax and turn around and then pay what’s left in the form of dividend, it just pays it out as far as the majority of the profits to the individual holders, which the individual holders then in turn have to pay the taxes.

So therefore, by having REITs in an IRA, you’re missing out on that advantage because an IRA is already deferring the income tax because you’re going to pay the tax of a traditional IRA when you start getting your distributions, or if you’re a Roth IRA, then you’ve already paid your tax, and therefore you’re not paying taxes but you would have had reduced taxes anyway if you had it in a traditional account.

So again, if you’re looking for some higher yielding investments, again look for ones that are not tax-advantaged. You’re going to be seeing more of those in coming issues of Profitable Investing. Moreover, this also draws my attention to one of the new changes with our new website which I specified the ideal account for each major stock holding in which we have a tax specified by the letter T or a tax-free account represented by the T and F. Therefore, this takes into consideration whether the individual holding has a tax advantage which means it would be ideal in a taxable account, or whether it’s fully taxable and, therefore, ideally being tax free.

So, an example would be if you look at a regular corporation, let’s say like McDonald’s which is in the Total Return portfolio. McDonald’s is fully taxable in its dividend, and so while you can have it in a taxable account, ideally you want to have that in a tax free versus, as I mentioned in the question before, with a REIT or with a toll taker in the pass-through MLP category. Those make much more sense to be a taxable account, therefore reducing your taxes.

So, the end game I have is that if you can have two different accounts, you can allocate your holdings that will best capitalize on the tax status of those particular holding in the portfolio. That was my goal was to try to maximize your tax savings in each one of the recommendations in the newsletter.

Then one last word on this is because we have some foreign stocks and we might very well see some further opportunities because I have a lot of experience in following markets beyond the U.S., some stocks will also have taxes that will be owed by other countries. Therefore, the U.S. has tax treaties for this and agreement with other countries, but some of this will be impacted if you hold it in a taxable versus a tax-free account. Therefore, if a stock that’s primarily in a foreign country does have a tax advantage to have it in a taxable account, then I will specify it. If not, then I’ll specify it a tax-free account.

Note that when I make a recommendation, I’m going to specify what the tax element is going to be if it’s a foreign company. So that’s the purpose of having the tax and tax free as well as having the idea of keeping the tax advantage things in taxable accounts.

The next question I get from Babu(?) in which he says we have some dead dog stocks from the recommendations including General Mills, Teva, GE which is standby, Kimberly-Clark and so forth, some of the pipelines.

So, as I’ve talked about in the presentation, there are lots of good opportunities in certain segments of the portfolios, principally in the utilities, the REITs, the toll takers, the pass-throughs and so

forth and the banks. There are some challenges in the consumer products marketplace, and to that concerns over costs both in the input goods as well as costs in the transportation of those goods as well as competition creating some margin pressures.

So, I’m looking at those and, therefore, there might very well be some reason for some profit taking or for some sales. But the key thing is that I’m reviewing each and every holding on an ongoing basis with the idea that should we buy these things all over again and up to what price. If I can’t have a positive thought on that, then we’re going to have to move to sell and either book some profits or sell and redeploy in something more appropriate.

The next question I have from David. He says, “Long-time subscriber here. Richard had his share of clinkers. It’s understandable. Less understandable is the fact he might mention them briefly but no firm answer, and then they would fade away and be ignored. Perhaps your new administration will firmly address. I own GE, KMI, PAA. They’re down.”

So again, as we said, some of these have been sold off because of their overreaction to interest rates and some to the misunderstanding as far as the advantages to the individual investor like the pass-throughs and the REITs as opposed to the institutional investor which I think makes them a great buying opportunity. With General Electric and some of the others, again they’re currently on the sidelines, but I would be hard pressed at the moment to want to buy them. Again, going forward, I think if anything I might be a little more aggressive at some of the sales if the company is either not panning out or if we’re going to want to book a profit.

Next question I get is from James, and he comments on the change from the PIMCO Income Fund from the two different classes. The idea that here what occurred from PIMCO was they consolidated the two classes of shares. The one class that we have been buying and owning in Profitable Investing under Richard Band’s recommendation and successfully profiting from the Income Fund and so forth and from the opportunities was that we do not have to paid a load, and we do not have to pay a redemption fee.

Now PIMCO basically saw to its advantage to merge its two fund classes and end up with a fund that charges a load on the front end and also potentially charges a load on its back end. So, the end result is that that really can no longer be considered a buy recommendation.

Now as far as going through the iteration as far as how to deal with it, so existing shareholders of the fund are basically grandfathered in as far as not having to pay the redemption fee, and they’re also grandfathered in as far as their direct purchases of the existing fund. But for new purchasers, meaning other subscribers coming in, it doesn’t make sense and, therefore, we’re going to be looking at taking some further action with this fund and its replacement, because it no longer fits with the criteria of having a no-load fund for all subscribers. So, look for something more on that in the coming issue.

Next question I have is from A.A., and he says, “Regarding preferred shares, I spent 18 minutes with a TD Ameritrade agent, and they could not find the Digital Realty Trust preferred share that you mentioned in the journal the other week, and at Fidelity they asked for the CUSIP,” and so going forward when I recommend a preferred share, I’m going to make sure that I provide the CUSIP for these and not just the symbol because with preferred shares sometimes different brokerage firms will use a different system.

Some might use a DLR.J for the J class share. Others might use the DLR.PJ for preferred and the J class, and others might use other permutations. But for your reference, the CUSIP number for the J class preferred share that’s trading for around $24, yielding about 5.45 percent, the CUSIP number is 253868855, and again we’re going to be looking to add that into the portfolio description as well on the website and in the future issues. So, thanks for that question.

So, the next question I have is from Charles. “Where do you think we are in the business cycle? Well, as I mentioned earlier, I think we are still in an expansion phase, and what I want to point you to is business investment and capital in the positive. Also looking at the consumer, I think is still getting very robust in their spending, and with the employment conditions and further bump-up in wages I think the business cycle is still on the ascent and, therefore, I still think there is more up side for the economy and I think further up side for the marketplace.

So, the next question. “I read your April 6 letter. I’m more interested on your thoughts that the market went down 700 points. Richard always stated why the market either went up or down dramatically. So, give us some insight on what happened on the 6th.” Well, of course it was part of the major flare-up over concerns over the tariffs and the pending trade war and, therefore, the market action that we’ve had for this week, we’re seeing much more certainty that the trade war is going to be averted.

We’ve already seen positive negotiations to the U.S. in South Korea. We’ve seen positive trade negotiations with the U.S. in Europe. We’ve seen positive negotiations going on with Japan, and now we’re getting a pledge from the Chinese that they basically want to be proactive at making reforms. Therefore, that’s been very buoyant for the market action for the day and reversing much of what we saw from last week. That’s what I will continue to do in further issues of the journal.

Next question we get is from Nicholas. He says, “Welcome, Neil. Why does the model portfolio have no international exposure?” Well, I would argue that yes, we do. We have SSE plc which I talked about in the utilities segment earlier, and again we have some other exposure within some of our funds that give us some of the global exposure including the new Baron equity fund that we added into the portfolio under the symbol BIGFX which has some very interesting companies and some of the global technology companies including Tencent holding which I talked about a few moments earlier.

Again, I see there are a lot of opportunities to present some great companies that are building and expanding and just don’t necessarily happen to be based in the United States. Just as U.S. companies have far-flung operations, foreign companies have operations in the U.S. as well as around the globe and, therefore, if I can find a great value and somebody paying a good dividend, then I’m going to present it for you and you’re going to see it in future issues of Profitable Investing.

Then Mark asks, “What advance criteria would you use to call the beginning of a bear market?” Well, I think I talked a little bit about this earlier. I’d be looking for credit conditions to tighten. So, if we’re starting to see credit conditions tightening for businesses, credit tightening in the banking front, and if we start to see credit conditions start to tighten for consumer credit or start to really reverse, those would be some of my initial warning signs of potential for a bear market.

I also would be looking for business fixed and variable investment as well as capital expenditures in business and industry. If I start to see a dramatic pullback, these would be warning signs that we

might very well be looking for a pullback in the marketplace, but I think the tighter credit I think is going to be one of the better indicators that we’ve got a problem. So, I always keep an eye on it, and I’ll be letting you know if we’re going to see some further troubles as we head down the next so many quarters.

Next question I get from Robert. “What do you anticipate is the future for state and municipal bond funds?” He said, “Thanks.” Well, my argument that we have is I think there’s going to be a lot more for municipal bond funds. Again, I mentioned earlier. You might want to look if you haven’t described to the Dividend Digest that InvestorPlace puts out. I talk about some of the muni funds, and you’re going to be seeing more of that in the coming issues within the journal and Profitable Investing.

I think as I showed earlier in the bond market session, municipal bonds I think represent a great absolute yield advantage and even more so on a taxable equivalent standpoint. Therefore, I think that that state and municipal bond funds are great, and also, I’m looking at and will bring you forward some closed-end, multi-state or national municipal bond funds that have some really great yields that are pushing into the upper single digit rates with some great track records. So again, I’m very enthusiastic for the municipal bond market, and I’ll be bringing you some of my great ideas going forward.

Then I guess I’m basically getting told that I’ve got a last question here I’m going to deal with, and note that going forward I’ve got a lot of the questions I couldn’t get to, and I sure apologize for the technical snafus that delayed this, but I’m going to be taking more of these questions I wasn’t able to answer, and I’ll be answering that in the next issue of Profitable Investing and some of the other venues.

So, I’ll be addressing that in the journal and elsewhere, so stay tuned to that. Again, I greatly appreciate your commentaries and your e-mails and your suggestions, so again keep those coming. I appreciate all the feedback and all the criticism and all the questions and suggestions as well.

So, the last question I’d like to answer is, “What sectors of the economy do you see doing well for the balance of 2018?” Well, I think in general I think the energy market is going to see some further progress. Technology I think is going to see a rebound and then some further progress. I think the industrials segment I think is going to do quite well particularly with some of the realignment in trade.

I think from a market standpoint I’ll reiterate that the REITs I think are a great buy right now. The toll takers in the pass-through part of the marketplace and utilities; I think those three are great buys right now, and lastly, I’ll also reiterate based on the question before, I think municipal bonds are going to be a great value buy right now, and you’re going to be reading more about that from me going forward.

So, with that I’m being told I need to wrap it up. Again, for all of you that have stuck with me through this, I’m very grateful. I hope this has been helpful. Note that the video will be posted soon, and then the transcript will be put up in the following week and then stay tuned. So next month we’re going to be doing another one of these webinars, and I’m going to do it at the office in person, so we’re going to absolutely minimize any technical snafus that might occur. For any of those I greatly apologize. I really appreciate your patience, and I’m very enthusiastic to continue Richard’s legacy.

I’ve been staying in contact with Richard, so I’m going to be bending his ear now and again, and I’m going to be listening to what he says. Again, I think it’s going to be a great product, and hopefully I’ll

be able to provide some great opportunities for you in the coming issues. So, thanks very much and have a good evening and thank you for participating.