Dear Subscriber,

When I first started this publication, big changes were in the air. A new vision of the future and a wiser approach to investing were sorely needed.

Government debt was strangling the economy. Gold was on the verge of doubling in value. Stocks would soon surprise everyone, suffering a massive correction before launching one of the biggest bull markets ever.

The year was 1976, over four decades ago. I was the editor. And with my father by my side, we provided the new vision of the future.

Today, in some interesting ways, the cycle is repeating itself. Yes, we live in a very different world. Yes, the opportunities and risks are also different. But like then, big changes are in the air, and a new vision of the future is needed.

I know of no one better to provide that vision than my dear friend, Bill Hall. He has man-aged some of my own money and kept it safely growing through thick and thin. He has man-aged the assets of some of America’s wealthiest families, and achieved the same.

Now, I have asked him to do something similar for you: To give you his vision, his fore-casts, and his guidance. To help you keep your money safe, earn good yields, and use the changes ahead — no matter how frightening — to grow your wealth. All via investment rec-ommendations that are very specific, clear, and easy for you to decide and act upon.

Meanwhile, I have also given Mike Larson a new mission: To be the lead writer for Weiss Research’s sister company, Weiss Ratings. I’m delighted that he’s there for me, and he is too.

Starting today, Bill will hit the ground running. He has nearly three decades of experience as an investment pro. He shares my outlook for the future. And more importantly, he has a proven track record that is 100% consistent with the fundamental philosophy of Safe Money: Not in-and-out, high-roller trading, not esoteric investments that are easy to buy but tough to sell. Rather, he will steer you to the most solid, liquid, steady, and long-term profitable investments that money can buy.

Bill will inject new life into Safe Money. He will give you the opportunity to harness any changes raining down from Washington. And he will help make sure, that unlike most inves-tors, you are never caught off guard.

Please join me in congratulating Bill Hall in his new role as Editor of my 40-year-old Safe Money Report.

Good luck and God bless!

Martin

Money and Markets’ Issue 513 | January 2017

New Vision … New Opportunities …Welcome to the New Safe Money Report

SAFE MONEY REPORT

Inside this Issue ...

Hello, my name is Bill Hall and I am the new editor of the Safe Money Report. As a 30-year Wall Street veteran, I’ve been through good markets and bad ones, I’ve watched numer-ous economic environments and

political scenarios play out and I’ve seen countless investment fads come and go.

Throughout my entire career, I’ve had one — and only one — overarching objective: To keep the money that was entrusted to my care safe while earning a solid and respectable return over time. And I’ve stuck to that re-gardless of whether it was during the best of times or the most turbulent times.

Today, I follow on the outstanding legacy of the previous Safe Money Report editors as we continue along our journey to make mon-ey in a prudent and thoughtful way. As we move on together, we’ll follow a strategy that I call Participate and Protect.

So what does Participate and Protect mean? It means we are going to:

#1: Position the Safe Money portfolio to make money by capitalizing on the mar-ket opportunities that are present based

on the realities of the overall economic environment in which we find ourselves and #2: Defend against portfolio losses by avoiding the pitfalls that trip up most ev-eryday investors.

Why? Because we want to make money that you can hold onto and use as you see fit. We won’t pursue some slap-dash trad-ing strategy where you find yourself at all-time highs one day and deeply in the red the next.

We are talking about bui lding real , permanent weal th.

The goal is simple yet powerful: To com-pound your wealth over time. It’s a strategy my clients – some of whom are fortunate enough to be among the richest families in the world — have been using to grow and safeguard their wealth for decades.

What’s more, I ’m going to provide you with real , act ionable advice – mean-ing specific recommendations that you can implement – to grow and protect your nest egg. I won’t waste your t ime with ivory tower economic commentary or pie- in- the-sky theoret ical blather about the financial markets .

Bill Hall, Editor

Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 7

Wise Investor . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 11

About the Author . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 5

Dashboard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 6

SAFE MONEY REPORTPage 2

I am going to deliver straight talk with hard hitting advice so you, the everyday investor, can turn the tables on the Wall Street insiders and invest only when the odds are squarely in your favor.

What Investors WantAt the most basic level, we all want three

things from our investments: To provide a de-cent level of income, solid gains, and the safe return of our precious investment capital.

I know what you’re thinking: That seems like a fairly straightforward thing to do. But in today’s heavily indebted world where fi-nancial market action is deeply influenced by global central banks and their experi-mental monetary policies, it’s become a lot harder than you may know.

And that’s especially true when it comes to income.

The fact is we live in a low-yield world and, without a major paradigm shift, we are going to be stuck here for a long time.

That’s why I want to use my first two is-sues of the Safe Money Report to explain why “low and longer” is the reality for in-terest rates and yields going forward. Plus, I will reveal to you the clear and present dangers in a low interest rate world.

But most importantly, I’ll tell you what you can do to protect yourself in this “low and longer” interest rate environment.

As a Safe Money subscriber, I’m also going to share with you a strategy that the wealthi-est of my clients are using to profit in this environment. And best of all, it’s a game plan that works just as well for everyday investors as it does for the rich and famous.

First off, let’s take a look back in time to put this discussion in perspective.

In 2007, the interest rates for Trea-sury bills, CDs, and money market funds all stood at levels greater than 5%. And while that seems like ancient history now, the year 2007 – as a result of the onset on the Great Recession — marked the end of an era when investors could earn a re-spectable risk-free cash-on-cash yield on their bank deposits.

And sometimes a picture is worth a thou-sand words: The chart below reports his-torical bank certificate of deposit yields beginning in 1984.

And for more adventurous yield-seeking fixed-income investors, there was always the risk-free 10-year U.S. Treasury with yields be-ginning at an astronomical rate of 15.89% in 1981 declining to today’s paltry level of 2.32%. On the next page, you'll see a chart that shows 10-year Treasury Yields since 1981.

What you need to know now is that 5% (or even 4%) interest yields on relatively short-term risk-free deposits (meaning five years or less) are not returning anytime soon … no matter how hard we wish for them to return. Here’s why …

The yield on the 10-year U.S. Treasury is

Data Source: Bankrate.com

1985

Historical CD Interest Rates (1984-2016)

0.00%

1.75%

3.50%

5.25%

7.00%

8.75%

10.50%

12.25%

14.00%

1990 1995 2000 2005 2010 2015

6-month CD yield 1-year CD yield 5-year CD yield

by Bill Hall Page 3

future issues of Safe Money Report . But for this discussion, it shows how the Fed-eral Debt has exploded since the Internet Crash in 2000.

And a big chunk of this debt – along with a similar amount in the private sector — is set to reprice soon.

If this debt resets at even slightly higher rates, it means more money going towards debt service obligations and less available for discretionary spending. That drags down economic growth. It works just like your household budget: More debt and higher interest rates means less money in your pocket to spend. And for the economy, that results in slower growth, which leads back to lower interest rates. It becomes an end-less feedback loop.

Not a believer yet that interest rates are go-ing to be lower longer than anyone expects? Well, here’s further proof …

Below is a so-called “dot chart” from the Fed’s very own most recent Federal Open Market Committee (FOMC). The “dot-chart” below is an enhanced version produced by Business Insider.

up significantly from its Election Day level of 1.88%. But when you consider that it currently stands at only about 2.32%, that’s hardly anything to get excited about unless you are a bond trader or fund manager.

What’s more, to put the move in context, it stood at 2.24% as we entered 2016. So the upward move is not as dramatic as the mainstream media would lead you to be-lieve. And any move higher on the 10-year is most likely unsustainable.

Plus, the U.S. is awash in debt. In fact, at the end of 2016, the official accounting for U.S. Federal Debt – not including the unfund-ed future liabilities for Medicare and other social program obligations — topped $19 tril-lion. And it’s only going higher – especially if President-elect Trump gets the massive fis-cal spending and tax cuts he’s proposed.

There are many ways to look at U.S. debt. But no matter how you slice it, it’s a BIG number. Here’s a chart that shows you where we stand.

The following chart reports that U.S. Fed-eral Debt now exceeds 100% of U.S. GDP. This is an important chart because it has many implications, which we’ll explore in

‘81

10-year Treasury Yields since 1981

16(%)

14

12

10

8

6

4

2

0‘86 ‘91 ‘96 ‘01 ‘06 ‘11 ‘16

Data Source: Bloomberg

‘52

Gross Federal Debt as a % of GDP - Quarterly(Excluding Off Balance Sheet Liabilities)

110%

100%

90%

80%

70%

60%

50%

40%

30%

20%

110%

100%

90%

80%

70%

60%

50%

40%

30%

20%‘55 ‘58 ‘61 ‘64 ‘67 ‘70 ‘73 ‘76 ‘79 ‘82 ‘85 ‘88 ‘91 ‘94

Avg = 55.2%

‘97 ‘00 ‘03 ‘06 ‘09 ‘12 ‘15

Data Source: Federal Reserve Board, Bureau of Economic Analysis. Office Management and Budget. Through Q1 2016.

SAFE MONEY REPORTPage 4

It presents data from both the September and December meeting, making it easier to see the changes that occurred after the U.S. presidential election. The official version only reports the data for a single meeting. To add further intrigue, Business Insider has added the title “Fed Dot Plot.”

What’s important about this chart is that it shows each member of the FOMC’s “fore-cast” for future short-term interest rates.

If you are unfamiliar with it, this chart can be confusing to read. There’s also a lot of detail here so I am quickly going to explain how it works and hit on the high points to keep your head from spinning through meaningless details.

Each dot represents the “forecast” of an FOMC member about the future level of the Federal Funds Rate which is the base rate for determining all short-term interest rates including bank certificates. This group includes all the Fed governors and the district bank presidents. All 17 of them submit dots.

I recently read that someone said that the dot plots are not “forecasts.” While it’s true

that the Fed doesn’t use that word “fore-cast,” they instead call the plot their “as-sessment of appropriate monetary policy” for certain points in the future. So techni-cally, it’s what they think rates should be, not a prediction of what rates will be on those dates.

Is that a forecast? You can call it whatever you like. For me, it’s a “forecast.”

Getting back to the chart, the flat set of dots under December in 2016 represents a rare instance of Federal Reserve unanimity: They all agree where rates are right now. Ob-viously, that’s no surprise because the current rate is known.

The disagreement sets in as we move out into the future. For 2017 there’s one lone dot above the 2.0% line, with the majority below 1.5%.

Regardless, 2017 will be a much different year than 2016 if the Fed can indeed follow through as this chart projects. The dots imply that the fed funds rate will rise a total 75 ba-sis points next year. Presumably, that would be three 25 bps moves, but they can split it however they want.

They could also completely miss on their expectations as they have in the past. This time last year, the FOMC said to expect a 100 bps rise, or four rate hikes, in 2016. But as we now know, we only got one!

Follow the dots on out and you see that their assessments trend a little higher in 2018 and 2019, and then we have the “longer run” beyond 2019. You can see for yourself that most FOMC participants think rates at 3% or less will be appropri-ate as we enter the 2020s. The highest dot is at 3.75%.

Consider what this means. Today’s FOMC members can see no chance – yes, NO chance — that the funds rate will reach

2016

FED DOT PLOT

4.00Percent rate

3.753.503.253.002.752.502.252.001.751.501.251.000.750.500.250.00

2017 2018 2019 Long Term

Data Source: Federal Open Market Committee

September December

by Bill Hall Page 5

4% again. None!

This means the FOMC is telling us that the VERY BEST case we can hope for in the future is to see short-term bank certificates of deposits and short-term U.S. government bonds yields at 2.75% to 3% but not until the 2020s. That’s three years from now!

What’s more shocking is that I have been following the FOMC dots with great interest over the past several years and their “fore-casts” or assessments have consistently been drastically overstated.

Thus, after considering the FOMC’s overly optimistic forecasting history — and thinking about the realities of the highly-overleveraged U.S. and global economy debt service obligations crowding out pro-

ductive spending as a result of even small interest rate increases — I see little chance that traditional, safe, short-term invest-ments such as bank CDs and short-term government bonds will produce a respect-able yield that anyone can count on.

In my view, the recent upward move in interest rates is unsustainable and we remain stuck in a period where rates stay lower longer than anyone expects. That’s why I am watching global interest rate spreads like a hawk for any information that might signal a change. As of now, I see nothing.

This “low and longer” interest rate environ-ment is here to stay. That’s why it’s time for Safe Money investors to consider a different approach in their search for yield.

It’s the same approach that I am using for my clients. Make sure to take a look at the Strategies Section on pages 7 - 9 and, of course, the Portfolio Table on page 10 for an explanation of the strategy and the rec-ommended changes.

I’m out of space for this edition but I have so much more to share with you. Fortunately, there is a quick turnaround time between this edition and the February Safe Money Report.

So next month, we’ll continue our dis-cussion about the dangers inherent in a low yield environment.

And above all, learning what you can do to protect your wealth from the unintended consequences that only a few have the fore-sight to know about.

I’ll also let you in on the BIG investment opportunity that’s hidden in plain sight in February’s edition of the Safe Money Re-port. I can’t wait!

Disclaimer: Safe Money Report is s t r ic t ly an informational publication and does not provide individual, customized investment or trading advice to its subscribers. The money you allocate to speculative trading should be strictly the money you can afford to risk. While every effort is made to simulate the actual experience of subscribers, all performance figures must be considered hypothetical. References to examples of past performance are not intended to provide a total picture of positions results, and past results are no guarantee of future performance.

About the EditorFor Bill Hall biographical information, go to www.moneyandmarkets.com/experts/bill-hall

Copyright © 2017 by Weiss Research, Inc., Safe Money Report (ISSN 1086-251X), 4400 Northcorp Parkway, Palm Beach Gardens, FL 33410; 561-627-3300; Sales: 800-291-8545. Subscription rate: $198 for 12 monthly issues. Single issue price: $16.50. Publisher: Martin D. Weiss. Editor: Bill Hall. Research Supervisor: Amber Dakar. Staff: Daniel Talancha, Richard Haydan and Julie Trudeau. POSTMASTER: Send address changes to Safe Money Report, 4400 Northcorp Parkway, Palm Beach Gardens, FL 33410.

SAFE MONEY REPORTPage 6

SAFE MONEY DASHBOARD

Welcome to the new and improved Safe Money Dashboard

As a professional money manager, this is the in-formation that I look at each and every day. It’s jam-packed full of valuable information.

You’ll see that the Dashboard has four pri-mary segments.

First, are the performance numbers for various market indices and asset classes. I use this to get a sense of how a variety of financial markets are performing both in the U.S. and internationally.

Next, below the market indices I give you key economic and market metrics that I use to get a sense of overall economic and market conditions.

In the upper right is a chart that All-Star econo-mist Ed Yardeni publishes weekly that reports the quarterly consensus earnings estimates for the companies in the S&P 500. It’s useful in gauging the level of overall economic activity, corporate

US Stocks SPDR Dow Jones Industrial Average ETF Trust DIA 24.73 10.80 0.92 iShares Core S&P 500 ETF IVV 20.84 7.56 1.52 iShares Russell 1000 Growth ETF IWF 16.60 5.53 2.46 iShares Russell 1000 Value ETF IWD 25.86 9.89 0.84 Vanguard Small-Cap ETF VB 30.10 11.70 1.73International Stocks MSCI ACWI ACWI 18.57 7.35 2.37 MSCI Emerging Markets EEM 26.30 6.14 4.40Bonds US Core Corp Bond AGG 2.58 -2.76 0.47 20 Year + US Treasury TLT 2.54 -13.14 2.54Gold GLD 8.36 -12.21 3.55Key Market Metrics S&P 500 Div. Yield 2.33 2.13 2.06 Fed Discount Rate 0.50 0.50 0.75 10-Year Treasury Yield 2.09 1.48 2.36 30-Year Treasury Yield 2.88 2.17 2.95 Invest Grade Corp Yield 2.43 2.44 2.38 PCE Inflation Rate 1.10 0.90 1.40 CPI Inflation Rate 1.40 0.80 1.70

Name TickerTotal Return (%)

1 year 6 months YTDIndicator Type

I

S&P 500: Consensus Quarterly Y/Y EPS Growth 2017(Consensus analysts’ estimates in percent, weekly)

8

10

12

14

16

18

20

22

II III IV

Q1Q4

Q2Q3

I

Data Source: Yardeni.com

Shiller PE Ratio

45

40

35

30

25

20Avg=16.7

Black Tuesday

InternetBubble

Current:27.89

15

10

5

0

1/1/

1881

5/1/

1885

9/1/

1889

1/1/

1894

5/1/

1898

9/1/

1902

1/1/

1907

3/1/

1911

9/1/

1915

11/1

/192

0

5/1/

1924

9/1/

1928

1/1/

1933

5/1/

1937

9/1/

1941

1/1/

1946

5/1/

1950

9/1/

1954

1/1/

1959

5/1/

1963

9/1/

1967

1/1/

1972

5/1/

1976

9/1/

1980

1/1/

1985

5/1/

1989

9/1/

1993

12/1

/199

7

4/1/

2002

8/1/

2006

12/1

/201

0

4/1/

2015

Data Source: multpl.com/shiller-pe/

SubprimeCrisis

continues on page 11 ...

by Bill Hall Page 7

SAFE MONEY STRATEGIES

Make These Important Portfolio Moves

CERTAIN environment.

Now that interest rates have risen and we have President-elect Donald Trump waiting in the wings, what’s next?

For interest rates to move higher from their current levels requires a stair step move upward in U.S. GDP expectations from the 2% annual real-GDP growth that’s occurred over the past 10 years. We are talking about an increase to 3%-plus annual advance levels, which on a percentage basis would be an increase of 50% (moving from 2% to 3%). As our president-elect, would say: “That’s #YUUUUUGGE!”

Indeed, when President-elect Trump tweets, the markets listen for now because his policies offer the hope of a temporary acceleration in economic performance over the next few years. And for investors that’s a good thing.

But as a Safe Money investor, I remain cau-tious. Not because I am a Negative Nellie or naysayer. It’s because as a thoughtful inves-tor I don’t see how the demographic drags on the U.S. and world economy – an aging population, high debt-to-GDP ratios across the globe, technology displacement of human labor, and the retreat of globalization – are going to go away …Trump or no Trump.

That’s why I agree with the following general recommendations that Mike made last month when writing his final Safe Money issue:

• With your Cash and Cash Equivalents, con-sider short-term Treasuries, specifically, the iShares 1-3 Year Treasury Bond ETF (SHY). Very short-term debt securities do NOT suffer the large losses that long-term bonds and funds do when rates rise.

• Avoid the siren song of select higher-yielding alternatives like REITs. That’s be-cause they don’t just face interest-rate risk.

After reading the main article in this is-sue of Safe Money, you probably think my opinion about the overall financial envi-ronment and interest rates is much differ-ent than my predecessor Mike Larson. But that’s really not correct.

As an expert analyst, Mike got it right when he was warning that interest rates were too low across the yield curve prior to the U.S. presidential election and that they would reverse direction and go higher. He was right on point in the December issue of Safe Money when he reported that after the election “the yield on the 5-year Treasury Note has roughly doubled, hitting 1.87%, after bottoming out at 0.91% in early July. That puts it within a whisker of its highest since spring 2011. The 10-year yield has risen more than 100 straight basis points, while the 30-year yield has climbed to around 3.06% from 2.1%.”

And he was spot-on when he said: “Since rising rates drive bond prices lower, these moves are wreaking havoc on fixed-income funds of all shapes and sizes.”

But now that interest rates have made a dramatic relative move upward, as Mike pre-dicted, they remain extraordinarily low on an absolute basis.

Think about it — we are talking about a yield of approximately 2.32% on the 10-year U.S. Treasury. That means tying your money up for ten years in exchange for 1.25% paid semiannually for those 10 years with no hope of any increase in your cou-pon payment. Ten years is obviously a long time, but it seems like forever in this UN-

SAFE MONEY REPORTPage 8

They’re also vulnerable to losses stemming from the ongoing turn in the credit cycle and the tightening of lending standards.

• Explore funds that offer interest-rate protec-tion as well as slightly higher yields. Float-ing-rate funds are one option. As the name sug gests, these are funds that invest in cor-porate bonds whose coupon payments adjust higher when benchmark short-term rates rise.

• Focus the core of your portfolio on a handful of highly rated, fundamentally strong stocks that also offer generous yields. This is the really big winning idea for the Safe Money portfolio in the New Trump Era, so read on for the spe-cific recommendations.

As we enter the reality of the new invest-ment world that comes along with Donald Trump’s election and Brexit, it’s time to make some substantial changes to realign the Safe Money Portfolio for profit and pro-tection on the road ahead.

Yes, there’s a lot to do here, but the invest-ment world has indeed changed. And with that comes a whole new set of opportunities.

Recommendation 1: In the Total Return Component of the Safe Money Portfolio, sell all shares of the following open positions at the market: 100 shares Logitech International S.A. (LOGI); 50 shares Duke Energy Corp. (DUK); 100 shares Ennis Inc. (EBF); 40 shares Granite Construction Inc. (GVA); 80 shares Snyder’s-Lance Inc. (LNCE); 50 shares AT&T Inc. (T); 50 shares Reynolds American (RAI).

Recommendation 2: In the Profit Accel-erator Component of the Safe Money Port-folio, sell all shares of the following open positions at the market: 2 contracts General Motor January 2018 LEAPS 30 Put Options (GM180119P00030000); 30 shares B&G Foods Inc. (BGS); 50 shares KAR Auction

Services Inc. (KAR); 20 shares Interna-tional Flavors & Fragrances Inc. (IFF); 20 shares Northrop Grumman Corp. (NOC); 6 contracts Gold Bullion (GC1).

Recommendation 3: In the Cash & Equivalents Component of the Safe Money Portfolio, sell all shares of the following open positions at the market: 200 shares PowerShares International Corporate Bond Portfolio (PICB); 250 shares SPDR Bloomberg Barclays Investment Grade Floating Rate ETF (FLRN).

Recommendation 4: Move 20 shares UnitedHealth Group (UNH) from the Profit Accelerator Component to the Total Return Component of the Safe Money Portfolio.

Recommendation 5: In the Profit Ac-celerator Component of the Portfolio, buy a 10% position or 88 shares of SPDR Gold Shares (GLD).

Recommendation 6: In the Profit Ac-celerator Component of the Portfolio, buy a 15% position 124 Shares of iShares 20+ Bond (TLT).

Recommendation 7: In the Total Return Component of the Portfolio, initiate 2% po-sitions in the following high-quality growth companies: 12 shares Becton Dickinson (BDX); 20 shares PepsiCo Inc. (PEP); 32 shares Microsoft Corp (MSFT); 19 shares United Technologies Corp (UTX); 12 shares 3M Co (MMM); 18 shares Johnson & John-son (JNJ); 18 shares Praxair Inc. (PX); 24 shares Procter & Gamble Co. (PG); 18 shares United Parcel Service Inc. (UPS); and 3 shares Alphabet Inc. (GOOGL).

Keep in mind that my recommendations as sume you have $100,000 to invest in all three portfolios combined. Feel free to scale up or scale down the number of shares purchased de pending on your own

by Bill Hall Page 9

personal circumstances.

Wow, that’s quite a bit of restructuring. But when you’re done, you’ll have built a rock-solid foundation for your portfolio that will enable it to participate in the cur-rent market opportunities and provide pro-tection against market declines.

Let’s step back from the detail and assess what we’ve done.

First, with all the sales we’ve collected a lot of ammunition (or cash) to redeploy in the brave new post-Trump and post-Brexit world.

Second, the purchases of GLD and TLT are hedges against a U.S. stock market that looks to me like it’s set for a pullback. These are not long-term holdings. That’s why they are in the Profit Accelerator portion of the port-folio. If the U.S. stock market does decline as I suspect, these positions (TLT and GLD) should increase in value as investors seek the safety of gold and U.S. Treasuries.

When that occurs, we’ll sell these posi-tions into the market weakness, collect our profits and use the money to buy some long-term holdings.

What’s more, every Safe Money portfolio should have some gold. So we’ll probably be buying more in the Total Return component of the Portfolio soon.

Third, with all the cash that we raised, we used some of it to establish positions in 10 of my highest-conviction individual stock ideas. The companies whose stocks we purchased are among the highest-quality in the world and all pay a generous dividend yield (except for Alphabet Inc., better known as Google.)

These companies will form the core of your portfolio – powering it forward through earnings growth and capital appre-ciation and sharing their profits with you in

the form of dividends.

These 10 stocks, in addition to Mc-Donald’s Corp. (MCD) and UnitedHealth Group Inc. (UNH) that I’ve retained from Mike’s Safe Money Portfolio, will be your Dependable Dozen .

They’ll see you through thick and thin. And they’ll form the core around which all the other investment positions in the Safe Money Portfolio will initially revolve.

Fourth, after all the portfolio alignment that I’ve recommended here is complete, the percentage allocations in the Safe Mon-ey Portfolio will be generally as follows:

• 25% in stock market hedges – 15% TLT and 10% GLD

• 25% in high-quality dividend paying stocks – 12 individual companies

• 50% in cash or cash equivalents to be used for future buying opportunities

Yikes, it seems as if I have run out of space again and I wanted to tell you all about the 10 wonderful new companies that you now own and what makes them extraordinary.

Well , that wil l have to wait for the February issue.

But the good thing is that the turn-around for the February issue is quick so you’ll have it in your hands soon. I’m also sure that I’ll have some additional changes to the portfolio then too, so keep an eye on your email.

Remember, I’m always watching the mar-kets like a hawk, especially in these UN-CERTAIN TIMES, where market conditions can change at the drop of a hat.

If I see anything that your need to know about between now and the February issue, rest assured that I’ll send out a Flash Alert.

SAFE MONEY REPORTPage 10

Safe Money Report Overall Position Performance

SAFE TOTAL RETURNSnyder's-Lance, Inc. (LNCE) 12/7/2015 80 $36.24 $38.35 7.47 Sell at market Duke Energy Corp. (DUK) 3/4/2016 50 $73.98 $77.21 6.64 Sell at market Ennis, Inc. (EBF) 4/4/2016 100 $20.30 $16.65 (8.00) Sell at market AT&T Inc. (T) 5/6/2016 50 $40.67 $40.96 2.23 Sell at market Reynolds American (RAI) 7/5/2016 50 $53.73 $55.97 5.03 Sell at market Logitech International S.A. (LOGI) 8/8/2016 100 $20.68 $25.53 26.23 Sell at market McDonald's Corp. (MCD) 11/16/2016 25 $118.86 $121.50 2.22 3.04 Hold (Buy 25 shares at market)UnitedHealth Group Inc. (UNH) 12/5/2016 20 $160.19 $161.80 1.01 3.24 Hold (Buy 20 shares at market)Granite Construction Inc. (GVA) 12/23/2016 40 $56.00 $55.07 (1.43) Sell at market Becton Dickinson and Co (BDX) 1/23/2017 12 - 2.08 Buy 12 shares at market PepsiCo Inc (PEP) 1/23/2017 20 - 2.03 Buy 20 shares at market Microsoft Corp (MSFT) 1/23/2017 32 - 2.01 Buy 32 shares at market United Technologies Corp (UTX) 1/23/2017 19 - 2.09 Buy 19 shares at market 3M Co (MMM) 1/23/2017 12 - 2.13 Buy 12 shares at market Johnson & Johnson (JNJ) 1/23/2017 18 - 2.06 Buy 18 shares at market Praxair Inc (PX) 1/23/2017 18 - 2.11 Buy 18 shares at market Procter & Gamble Co (PG) 1/23/2017 24 - 2.02 Buy 24 shares at market United Parcel Service Inc (UPS) 1/23/2017 18 - 2.06 Buy 18 shares at market Alphabet Inc. (GOOGL) 1/23/2017 3

- $172.53 - $101.55 - $62.70 - $110.22 - $177.39 - $114.60 - $117.08 - $84.01 - $114.24 - $830.94 - 2.49 Buy 3 shares at market

Safe Money Total Return YTD Total Return (%) (0.14) PROFIT ACCELERATORGold Bullion 11/8/1999 6 $603.04 $1,197.58 98.21 Sell at market General Motor January 2018 LEAPS 30 1/11/2016 200 $5.90 $1.90 (67.80) Sell at marketPut Options (GM180119P00030000) B&G Foods Inc. (BGS) 8/8/2016 30 $51.02 $44.45 (12.05) Sell at market International Flavors & Fragrances Inc. (IFF) 9/6/2016 20 $130.02 $116.66 (9.54) Sell at market KAR Auction Services, Inc. (KAR) 10/10/2016 50 $43.57 $45.66 4.80 Sell at market Northrop Grumman Corp. (NOC) 11/7/2016 20 $237.80 $230.17 (3.04) Sell at market SPDR Gold Shares (GLD) 1/23/2017 88 - $114.21 - 10.05 Buy 88 shares at market iShares 20+ Year Treasury Bond ETF (TLT) 1/23/2017 124 - $121.31 - 15.04 Buy 124 shares at market Profit Accelerator YTD Total Return (%) 0.65 CASH & CASH EQUIVALENTSPowerShares International Corporate 3/9/2015 200 $26.43 $24.36 (4.24) Sell at marketBond Portfolio (PICB)iShares 1-3 Year Treasury Bond (SHY) 8/12/2015 250 $84.89 $84.46 0.19 21.26 Hold (Buy 250 shares at market)SPDR Bloomberg Barclays Investment 12/5/2016 250 $30.67 $30.60 (0.23) Sell at marketGrade Floating Rate ETF (FLRN)Cash - - - $23,694.10 - 25.62 Hold Cash & Equivalents YTD Total Return (%) (0.10)

Initial Open Positions Cost ............ $73,912.04 Open Positions Value ......................$76,305.9Open Positions Total Return Since Initial Purchase Date (%) ........................3.24Cash (%) .............................................23.69S&P 500 YTD Total Return (%) ..................1.67

SAFE MONEY PORTFOLIO Initial Purchase

Date

Avg. Cost Basis Per

Share

Current Quote ($) as of

01/13/17Share

Allocation

Total Return

(%)(%)

Allocation

Current Advice

Current Subscribers

New SubscribersCompany Name (Ticker)

Disclaimer: Safe Money Report is strictly an informational publication and does not provide individual, customized investment or trading advice to its subscribers. The money you allocate to speculative trading should be strictly the money you can afford to risk. While every effort is made to simulate the actual experience of subscribers, all performance figures must be considered hypothetical. References to examples of past performance are not intended to provide a total picture of positions results, and past results are no guarantee of future performance. The table includes all open positions recommended in the monthly Safe Money Report newsletter or flash alerts. As of 1/12/16 entry and exit prices are filled using open market prices of the next trading day following the release of the monthly issue. Source: Bloomberg. New Subscribers: Follow the recommendations. As of 07/20/12 flash alert trades are filled using open market prices following the release of the trading issue. Data date: 1/13/17

by Bill Hall Page 11

SAFE MONEY WISE INVESTOR

Looking for Certainty in an Uncertain World

Looking back, 2016 was a year of political surprises. From the growing support for nation-alist parties across Europe, to the U.K. Brexit referendum, to Donald Trump’s presidential election victory in the U.S., it’s obvious that a major populist shift is underway. And that makes it inherently UNCERTAIN what new government policies, trading arrangements and geopolitical fault lines will emerge.

And in addition to all the social and political UN-CERTAINTY, we have the experimental and UN-CERTAIN policies that the world’s central bankers have been using to keep the world economy afloat.

When you add it all up it’s a lot of UNCER-TAINTY heaped on top of more UNCERTAINTY.

As a professional investor, I know that UN-CERTAINTY means risk … as well as oppor-tunity. But with U.S. stock valuations already sky-high the risk of loss is currently higher than the potential for gain – at least in the short run.

That’s why as Safe Money investors we are go-ing to follow a strategy that targets CERTAINTY and clarity in a highly UNCERTAIN world.

And this is how we are going to do it ...

We’ll focus the core of our investing on the highest-quality companies in the world. By do-ing so, we’ll achieve the best of both worlds: We’ll collect a highly CERTAIN dividend stream that’s comparable to the yield on the 10-year U.S. Treasury. AND we’ll hitch the Safe Money Portfolio to a growing earnings stream that will power the portfolio higher and provide a natural hedge against market pullbacks.

You have to admit, that’s a powerful one-two combination!

While a lot of the companies that you’ll see popping up in the Safe Money Portfolio may seem like familiar household names to you, when we dig in and look closely you’ll discover just how special they are. That’s because they have global distribution platforms for their market-leading products that allow them to grind out higher prof-its and grow in even the most difficult and UN-CERTAIN economic conditions.

When you review the Strategies section, you’ll see that we’ve already started with the Dependable Dozen. And next month, we’ll like-ly add a few more to the portfolio. But we must be patient and buy only when the price is right.

But that’s not all: Around this core of great companies, we are going to add some care-fully chosen specialty ETFs and mutual funds to cast a wider money-making net.

And finally, we’ll use effective and easy-to-im-plement market hedges to protect the Safe Money Portfolio from downturns. This month, I recom-mended TLT and GLD in the Strategies section.

I am very excited to roll this out over the com-ing months and to show you how it all works. That’s because in a highly UNCERTAIN world, it’s important to stick with what you know so your portfolio can Participate when the market advanc-es while being Protected during market declines.

SAFE MONEY DASHBOARD... continues from page 6

profitability and current stock market valuation.

Finally, below the quarterly consensus earnings chart is a chart that provides the Shiller P/E for the S&P 500. This is an extremely important tool I use when as-sessing long-term U.S. stock market valuation.

I look forward to telling you more about these important tools in the future. Once you master them, they’ll take your understanding of the financial markets to an entirely new level.

SAFE MONEY REPORTPage 12

low percentage value reflects an undervalued market based on total economic output.

Using the historical valuations in the graph above, I have divided market valuation into five zones in the following chart:

Based on this chart and the graph, you can see for yourself that the U.S. stock market is sitting in significantly overvalued territory as measured by the so-called Buffett indicator. But we’ve been in this zone for several years now and there’s still a long way to go before hitting the level achieved just before the tech bubble burst in 2000.

You’ll see a second graph that I use to get a sense of overall stock market valuation in the Safe Money Dashboard Section on page 6. It’s called the Shiller P/E ratio.

I’ll explain how the Shiller P/E ratio works in future Safe Money issues but for now you can see by looking at the chart on page 12 that the Shiller P/E ratio is currently pegged at 27.89, which is not as high as the levels before the Tech-Wreck in 2000 and the Great Depression of the 1930s but slightly above the level before the sub-prime debacle.

The bottom line here is that like the “Buffet Indicator,” the Shiller P/E ratio says U.S. stocks are currently very, very expensive. This doesn’t mean sell everything and go to cash, especially when cash earns nearly zero interest today. It means: Continue to participate, but do so cau-tiously to protect your portfolio.

Ratio=Total Market Cap / GDP Validation

Ratio < 50% Signi�cantly Undervaued

50% < Ratio < 75% Modestly Undervalued

75% < Ratio < 90% Fair Valued

90% < Ratio < 115% Modestly Overvalued

Ratio > 115% Signi�cantly Overvalued

SAFE MONEY READERS’ Q&ADo you think the U.S. stock market is over-

valued at current levels?

I’ll reference two graphs to answer your question.

Here’s the first, and it’s the one that Warren Buffett says is his favorite indicator of stock market value.

The power of this graph is in its simplic-ity. That’s because it measures the total mar-ket capitalization (or value) of the U.S. stock market as a percentage of U.S. GDP, which is the generally accepted measure of the total output of the U.S. economy.

This graph reports that, during the past four decades, the total-market-capitalization-to-GDP ratio has varied within a very wide range. The lowest point was about 32% in the deep recession of 1982, while the high-est point was approximately 151% achieved during the tech bubble in 2000. Simply put, a high percentage value means the market is highly valued compared to the total output of the U.S. economy. And, on the other hand, a

1950

The Buffett Indicator: Corporate Equities to GDP160%

140%

120%

100%

80%

60%

40%

20%

0%1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020

Data Source: dshort.com