Quote of the Week

“Don’t be pushed around by the fears in your mind.  Be led by the dreams in your heart.” – Roy T. Bennett

Tech Corner

Last week was a “nothing burger” for the equity markets. All of the equity indexes were mostly flat.

First a bit of good news. I just got an email stating that if you are on Medicare you can get up to eight free COVID tests per month without the hassle of filing a claim with your private insurance. This marks the first time Medicare has covered an over-the-counter test at no cost. All you have to do is show your Medicare card to one of the many participating pharmacies including Walgreens, CVS, and Costco to collect a free test kit.

Second, I have discovered another great source of quality global information from Ian Bremmer. You may have seen him being interviewed on many of the news broadcasts. He is the founder of the Eurasia Group and one of the most respected men I follow. Just google GZERO World. You can sign up for his free email letter. Once you get to his site, I suggest you look for his interview with Alexander Stubb from Finland.

In case you missed my last letter, I recommended two other sources of high-quality information. Caspian Report is a series of YouTube videos you can download. I highly recommend the video on the weapons the world is sending to the Ukrainian Army. I wouldn’t want to be a soldier in a Russian tank. The other source of great information is Peter Zeihan. You can sign up for his free emails.

It is now official; the yield curve has inverted. This is when the 10-yr U.S. Treasury has a lower yield than the 2-yr U.S. Treasury. Yield curve inversions have a long track record of predicting equity market corrections and broader economic slowdowns. Extended yield curve inversions have preceded nine of the last nine recessions going back to 1954.

Here’s how the three previous yield curve inversions ended up:

*Year-end 1999: The market peaked in August 2000 (3-6 months later) and then lost -40% over the next two years

-Year-end 2005: The market peaked in November 2007 (18-24 months later) and proceeded to lose -45% over the next 18 months

-Summer 2018: the market peaked in mid-September 2018 (3 months later) and dropped -20% over the next 3-4 months.

What was interesting about the latest period in the Summer of 2018, is that the Fed started raising interest rates into declining growth. This is exactly what is happening this time.

We have just added two new ETFs to the portfolio. U.S. Aerospace and Defense (ITA) is showing increasing signal strength. ITA is dominated by two large defense contractors which make sense due to the war in Ukraine. Simplify Healthcare ETF (PINK) back tests well in Quad IV environments and has good signal strength. Will are still preparing for a decline in the equity markets by staying safe in U.S. Treasuries, bonds, and cash.

Tom’s Thoughts

Regardless of the extent of your personal wealth, asset protection should be addressed as a part of estate planning.  The following article from Broadridge Financial Solutions, Inc. has some suggestions that may be appropriate for you.

Asset Protection in Estate Planning

You’re beginning to accumulate or already have substantial wealth, but you worry about protecting it from future potential creditors. Whether your concern is for your personal assets or your business, various tools exist to keep your property safe from tax collectors, accident victims, health-care providers, credit card issuers, business creditors, and creditors of others.

To insulate your property from such claims, you’ll have to evaluate each tool in terms of your own situation. You may decide that insurance and a Declaration of Homestead may be sufficient protection for your home because your exposure to a claim is low. For high exposure, you may want to create a business entity or an offshore trust to shield your assets. Remember, no asset protection tool is guaranteed to work, and you may have to adjust your asset protection strategies as your situation or the laws change.

Liability insurance is your first and best line of defense

Liability insurance is at the top of any plan for asset protection. You should consider purchasing or increasing umbrella coverage on your homeowner’s policy. For business-related liability, purchase or increase your liability coverage under your business insurance policy. Generally, the cost of the premiums for this type of coverage is minimal compared to what you might be required to pay under a court judgment should you ever be sued.

A Declaration of Homestead protects the family residence

Your primary residence may be your most significant asset. State law determines the creditor and judgment protection afforded a residence by way of a Declaration of Homestead, which varies greatly from state to state. For example, a state may provide a complete exemption for a residence (i.e., its entire value), a limited exemption (e.g., up to $100,000), or an exemption under certain circumstances (e.g., a judgment for medical bills). A Declaration of Homestead is easy to file. You pay a small fee, fill out a simple form, and file it at the registry where your deed is recorded.

Dividing assets between spouses can limit exposure to potential liability

Perhaps you work in an occupation or business that exposes you to greater potential liability than your spouse’s job does. If so, it may be a good idea to divide assets between you so that you keep only the income and assets from your job, while your spouse takes sole ownership of your investments and other valuable assets. Generally, your creditors can reach only those assets that are in your name.

Business entities can provide two types of protection — shielding your personal assets from your business creditors and shielding business assets from your personal creditors

Consider using a corporation, limited partnership, or limited liability company (LLC) to operate the business. Such business entities shield the personal assets of the shareholders, limited partners, or LLC members from liabilities that arise from the business. The liability of these owners will be limited to the assets of the business.

Conversely, corporations, limited partnerships, and LLCs provide some protection from the personal creditors of a shareholder, limited partner, or member. In a corporation, a creditor of an individual owner is able to place a lien on, and eventually acquire, the shares of the debtor/shareholder, but would not have any rights greater than the rights conferred by the shares. In limited partnerships or LLCs, under most state laws, a creditor of a partner or member is entitled to obtain only a charging order with respect to the partner or member’s interest. The charging order gives the creditor the right to receive any distributions with respect to the interest. In all respects, the creditor is treated as a mere assignee and is not entitled to exercise any voting rights or other rights that the partner or member possessed.

Certain trusts can preserve trust assets from claims

People have used trusts to protect their assets for generations. The key to using a trust as an asset protection tool is that the trust must be irrevocable and become the owner of your property. Once given away, these assets are no longer yours and are not available to satisfy claims against you. To properly establish an asset protection trust, you must not keep any interest in the trust assets or control over the trust.

Trusts can also protect trust assets from potential creditors of the beneficiaries of the trust. The extent to which a beneficiary’s creditors can reach trust property depends on how much access the beneficiary has to the trust property. The more access the beneficiary has to the trust property, the more access the beneficiary’s creditors will have. Thus, the terms of the trust are critical.

There are many types of asset protection trusts, each having its own benefits and drawbacks. These trusts include:

  • Spendthrift trusts
  • Discretionary trusts
  • Support trust
  • Personal trusts
  • Self-settled trusts

Since certain claims can pierce domestic protective trusts (e.g., claims by a spouse or child for support and state or federal claims), you can bolster your protection by placing the trust in a foreign jurisdiction. Offshore or foreign trusts are established under, or made subject to, the laws of another country (e.g., the Bahamas, the Cayman Islands, Bermuda, Belize, Jersey, Liechtenstein, and the Cook Islands) that does not generally honor judgments made in the United States.

A word about fraudulent transfers

The court will ignore transfers to an asset protection trust if:

  • A creditor’s claim arose before you made the transfer
  • You made the transfer with the intent to defraud a creditor
  • You incurred debts without a reasonable expectation of paying them

Copyright 2022 Broadridge Investor Communication Solutions, Inc


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These are Larry Lof’s opinions and not necessarily those of Cambridge, are for informational purposes only and should not be construed or acted upon as individualized investment advice. Past performance is not indicative of future results. Due to our compliance review process, delayed dissemination of this commentary occurs.

The S&P 500 index of stocks compiled by Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. The Index includes a representative sample of 500 leading companies in leading industries of the U.S. economy. Indices mentioned are unmanaged and cannot be invested into directly.

Technical analysis represents an observation of past performance and trend, and past performance and trend are no guarantee of future performance, price, or trend. The price movements within capital markets cannot be guaranteed and always remain uncertain. The allocation discussed herein is not designed based on the individual needs of any one specific client or investor. In other words, it is not a customized strategy designed on the specific financial circumstances of the client. Please consult an advisor to discuss your individual situation before making any investments decision. Investing in securities involves risk of loss. Further, depending on the different types of investments, there may be varying degrees of risk including loss of original principal.




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