Expecting a Market Downturn? Make Sure You’re Following the “Noah Rule”
Predicting a major economic or financial event—whether that’s a recession, market downturn or even your own retirement—requires that you also take action. Otherwise your prediction was meaningless.
Time to Do the Hard Thing
Much of the reaction to last week’s Inflationary Angst letter boiled down to, “Get government out of the way and the free market will work.” Others said the opposite: Government must help people even more than it already does. I wish it were that easy. Neither of those options are what we need, and today I will explain why.
What Boris Johnson’s Election Victory Means for UK Assets
We expect to see flows back into UK equity and credit now that some of the Brexit uncertainty has been removed.
The 2020 Economic Outlook
U.S. economic activity is expected to remain mixed in 2020, with moderate strength in consumer spending and general softness in business fixed investment and manufacturing.
Should You “Sell” Volatility?
Academic theory predicts that the volatility implied by the VIX index will be greater than the realized volatility. That difference can be thought of as an insurance premium investors are willing to pay because volatility tends to spike when stocks crash, as in the last bear market. New research confirms that investors can profit from this and that such a strategy is uncorrelated with other traditional sources of return.
Weekly Unemployment Claims: Up 49K from Last Week, Much Worse Than Forecast
This morning's seasonally adjusted 252K new claims, up 49K from the previous week's unrevised figure, was much worse than the Investing.com forecast of 213K.
Insured municipals offer investors additional assurance
Insured bonds continue to pay interest and principal even if an issuer defaults.
Consumer Price Index: November Headline at 2.05%
The Bureau of Labor Statistics released the November Consumer Price Index data this morning. The year-over-year non-seasonally adjusted Headline CPI came in at 2.05%, up from 1.76% the previous month. Year-over-year Core CPI (ex Food and Energy) came in at 2.32%, up slightly from the previous month's 2.31% and above the Fed's 2% PCE target.
Weekly Investment Strategy
Read the latest Weekly Headings by CIO Larry Adam.
Will Outsourcing Improve Profit Margins?
I’m not interested in letting most of my staff go. But I am also not up for adding to staff and therefore expenses.
Quiet Your Ego
If your ego is too loud, it stops you from reaching your goals and having a happier, more fulfilling life.
College Planning: Is the ROI in the College or the Major?
Over the course of 20+ years, families have been bamboozled into spending trillions on top-end colleges, while overlooking the fact that it's actually the academic major that is far more important.
The November Employment Report
Nonfarm payrolls rose more than expected in the initial estimate for November (+266,000), with upward revisions to the gains for September and October (a net 41,000 higher). In contrast, the ADP estimate of private-sector payrolls rose more modestly (+67,000). What to believe?
The Key Trends in the ETF Industry
Matthew Bartolini has recently recommended cybersecurity protection, housing and healthcare stocks for Q4 of 2019. He has also commented on the fact that fixed-income ETFs have recorded record inflows for 2019, and has likened investing the context of weakness in the U.S. manufacturing sector to “driving with the check engine light on.” We discuss those calls as well as other key developments in the ETF industry.
We don’t have much time to get our house in order, either in the US or globally. Everything I’ve said today applies, to various degrees, throughout the developed world. Thinking that 2% inflation or zero interest rates coupled with massive deficits will somehow help is beyond wishful thinking.
The Civilian Labor Force, Unemployment Claims and the Business Cycle
What does the ratio of unemployment claims tell us about where we are in the business cycle and our current recession risk? At present, the ratio for Continued Claims has been trending down.
’Tis the Season for Consumer Discretionary … or Not?
While all eyes are on estimated sales throughout December, sector performance for the month is historically not impressive.
How Financial Planning Can Become a True Profession
There are many prerequisites to becoming a true profession. Have we satisfied those requirements? And if so – do we desire to take the next step – seeking true status as a profession through legislation?
What Advisors Don’t Understand About Prospects
Few of us realize the anxiety-ridden mindset that drives prospects to seek a financial advisor. If they did, they would structure their initial meetings very differently.
What’s Ahead for the MENA Region?
As investors ponder the prospects for the Middle East and North Africa (MENA) region, Franklin Templeton Emerging Markets Equity’s Bassel Khatoun and Salah Shamma take stock of the investment landscape. They highlight some of the market developments in Saudi Arabia, Kuwait, Egypt and the United Arab Emirates (UAE) that have caught their attention.
Avoiding the Cost of Panic
Investors lose massive amounts due to panicked selling in down markets. This article identifies one critical action that can be taken to stem those losses.
GDP: Arithmetic and Forecasting
There are two broad approaches to forecasting current quarter GDP. Some economists will estimate a number and stick with it. Most will adjust their forecasts as new data arrive. This may seem fickle to the casual observer. Estimates will change week to week and even day to day...
Advanced Topics for Social Security Planning
For the vast majority of retirees, the most consequential decision they will make involves Social Security. One must decide when to begin receiving benefits, a decision that is quickly complicated when factors such as a spouse, children or a pension are involved. My guest today is Bill Reichenstein, one of the most prominent experts on Social Security.
The Small Things that Make a Great Office Culture
Small things will create a great office culture. Should you allow pets in the office? What about a dress code? Should you have casual dress on Fridays? Those are small things in the context of planning for your clients financial futures, but they can have a big impact on your team’s morale and productivity.
Why Advisors Shouldn’t Write Economic Commentaries
My guest today, Sara Grillo, has written that she would rather piece her own ears than read another economic commentary written by a financial advisor. That is the question we are going to explore today. For sure, your clients are interested in understanding the key trends and developments in the economy, particularly as it pertains to their investments. But should you, as advisors, be writing those commentaries?
Diversity and Inclusion in the Advisory Profession
According to a recent report by the consulting firm Cerulli and Associates, women make up only 16% of financial advisors – and that percentage is fairly consistent across all channels – brokers, banks and independent RIAs. Sheryl Garrett and I explore the issues around diversity and inclusion in the advisory profession. Why are there so few women and minorities in our profession? With an aging population of advisors due to retire in the next decade or two, what will the next generation of leadership among advisors look like? And what can be done to provide better career path options for women and minorities?
Health Insurance Companies: Rhetoric vs. Reality
The policy proposal of "Medicare for All" calls for nationalizing the U.S. health insurance system. While this is a politically unlikely outcome, the stock prices of the private sector Managed Care insurance companies have suffered as rhetoric heats up.
The Big Four Economic Indicators: Real Personal Income in October
Personal Income (excluding Transfer Receipts) in October fell 0.04% and is up 3.8% year-over-year. However, when adjusted for inflation using the BEA's PCE Price Index, Real Personal Income (excluding Transfer Receipts) MoM was down 0.22%. The real number is up 2.5% year-over-year.
A Noisy Barrier to Communication
It’s difficult to put your ego aside and focus on the other person. I confront this every day. But sometimes I fall into a vicious trap that advisors, as well, must avoid.
Does the American Shopping Mall Have a Future?
Black Friday is around the corner. Will US shoppers head to the mall? Or are malls out of fashion for good? The debate about the retail apocalypse is playing out in a single bond index.
5 Factors for Healthcare Organizations to Consider When Choosing an Ocio Provider
As the clock ticks toward 2020, the overall economic picture remains muddled. Ongoing trade tensions and slumping global growth have cast a cloud of uncertainty over the globe, and forward-looking return expectations continue to look less than impressive.
This Economic Indicator Is Proving the Naysayers Wrong
Although the PMI report is encouraging, there’s still reason to remain somewhat cautious long-term. The latest accounting of global debt levels was just released, and the news might be so bad that it’s good—for gold prices, at least.
Weekly Investment Strategy
Key Takeaways -Plentiful Jobs Harvest Should Help Economy Trot On -Low Turkey Prices Means More to Gobble Up -All S&P 500 Sectors Part of The Positive Parade
Conference Board Leading Economic Index Down for Third Consecutive Month
The latest Conference Board Leading Economic Index (LEI) for October fell to 111.7, down from the revised September figure of 111.8.
A Major Insurer Exposes the Weakness in the CFP Board’s Standards
The CFP Board had noble intentions with its new standards that became effective last month. However, its handling of conflicts falls so short that absent significant new guidance the credibility of the standards is in serious doubt. This is clear from the recent publication of a major insurer’s eye-opening disclosure intended to address conflicts.
Go See a Therapist
Therapists and accountants are valuable resources. They have confronted the issues we experience during our lives. But that’s not why I’m recommending you see a therapist.
The Use of Irrevocable Trusts in Medicaid Planning
There are several things a client can do to plan for long-term care costs that may be incurred as one ages. But for the large majority of clients for whom self-insuring is not an option, what are the alternatives?
Standing Alone Against the Crowd: Abandon Value? Now?!?
- In a prolonged anti-value momentum-driven rally, it’s easy and natural to forget the long-term value proposition of a rebalancing discipline.
- The evidence and intuition underlying a contrarian value investing discipline has proven merit in cycle after cycle across history.
- By steadily rebalancing against the market’s most extravagant bets, RAFI strategies are positioned to recoup accumulated shortfall at the cycle’s turn, delivering meaningful long-term value-add.
- The continued outperformance of today’s most dominant companies is unlikely to be sustainable in the long run.
Investors would do well to prepare for greater dispersion
Rick Rieder and Russ Brownback argue that – in contrast to the past decade of monetary policy lifting all economic boats at once – the years ahead are likely to be characterized by great dispersion between economies, industries and markets. Understanding that dynamic will be the name of the game for investment success.
Tactical Asset Allocation Views – Q4 2019
Changing dynamics may present a new set of opportunities for investors.
Is It Time to Worry about Debt?
The economic calendar is normal with a focus on housing. Some will be parsing the Fed minutes while others watch the impeachment hearings. This week’s topic may not be a media focus for the week ahead, but it gets constant attention. With a government shutdown and the debt ceiling on the agenda, let’s seize the moment and ask: Is it time to worry about debt? I suspect that many readers believe it is way past time!
What's With All the Mass Protests? (Hint: It's Not About Income Inequality)
The media’s inequality narrative completely ignores the fact that the global demonstrations are, at the end of the day, in response to government incompetence and failed socialist policies.
The Road to Default
We will spend the latter part of the 2020s going through a kind of worldwide bankruptcy. We won’t call it that, and it will take a lot of argument because we won’t have a court to take charge. But we will collectively realize the situation can’t go on and find a way to end it. I’ve taken to calling this “the Great Reset.”
Are VIX ETPs Effective at Protecting Downside Risk?
A long-sought goal of advisors is a cost-effective way to hedge one’s equity holdings. I previously wrote about why put options fail to achieve this goal. In this article, I consider whether volatility-based products are any better.
Fed Next Steps: What’s Likely, What’s Not
The Fed has signaled it is unlikely to cut interest rates again in December, but we expect further rate cuts next year. We believe the Fed has not yet done enough to protect the economy against headwinds. While we don’t forecast a US recession, we think additional monetary policy easing will be needed to stabilize growth.
Climbing the ESG Learning Curve in Emerging Markets
ESG integration is best used as a tool to improve portfolio returns and/or reduce risk. While usually thought of as a company-level concern, material ESG data can be very useful at the country level as well, especially in emerging markets. ESG signals are only as good as the quality of their inputs.
How to Get Your Clients Help with Medicare
Should you be comfortable referring your clients to CPAs or other professionals who also handle annuities, investments and insurance?
Because you’re an expert on all things financial, you may believe you know what’s best for others – in their financial lives and otherwise. But it’s unlikely you do. The culprit is your inability to communicate effectively, as these “bloopers” illustrate.
Slowing but Not Stopping (Yet)
Today I want to focus on that “entering a rough period” part. The signs are growing clearer and the bumps bigger.
NewsLetter – November 2019
Read Harold Evensky's latest Newsletter.
Don’t Believe Your Own Press Releases
I like to think I’ve learned from my mistakes, of which I’ve made plenty. Recently I reflected on what’s worked and what hasn’t. Here are two rules that have endured.
Revisiting the Six Traditional Ways to Find New Clients
In my previous article, I talked about how important it is to know who you best serve and what types of people and personalities are right for your firm. Now, let’s determine how to reach those people and grow your firm.
The Seven Essential Business Skills
Are you just starting off or have you been at it for years? Here are seven essentials business skills for every advisor.
The October Employment Report
Nonfarm payrolls rose more than expected last month, despite being held back by the strike at General Motors (which subtracted 42,000) and the exit of 20,000 temporary workers for the 2020 census. There is some uncertainty in these data.
The Restoration of Monetary Policy Equilibrium
Rick Rieder, Russ Brownback and Trevor Slaven contend that much of the recent criticism brought to bear against Fed policy makers is misguided, and in fact the central bank has done an admirable job of pivoting toward a pragmatic equilibrium in recent months.
U.S. Economic Outlook
The Northern Trust Economics team shares its outlook for U.S. economic growth, inflation, unemployment and interest rates.
Weekly Investment Strategy
- The Fed Rate Cut To ‘Spring’ The Economy Forward
- Economic Data Releases Put Recessionary Fears to ‘Rest’
- Signing Date for Phase One Trade Deal Still ‘In The Dark’
How to Protect Businesses against Embezzlement
Few things strike more fear and disbelief into the heart of an employer than learning a trusted employee has embezzled thousands of dollars. Here’s how businesses can protect against such a catastrophic loss.
Government Borrowing Grows, Fed Rate Outlook Is Steady
This week’s Fed meeting started a pause in overnight rate cuts. But what will happen if yields on the long end move up?
You’re Probably Underinvested in Gold
Investors may assume they have adequate exposure to gold because they’re invested in a commodities fund. But many of these funds have a relatively small weighting in gold, and so their gold exposure is much smaller than they realized.
Fed Cuts Rates as Expected … Three and Done or More to Come?
As expected, the FOMC lowered the fed funds rate (and the IOER) by 25 basis points; with a slightly more hawkish tone in the accompanying statement.
After Three Cuts in a Row, Is the Fed Done Easing?
Fed Chair Powell signaled that another “insurance” rate cut is unlikely. Instead, further rate cuts are contingent on a more material deterioration in the economic outlook.
The Fed Cuts Rates Again. Is a Pause Next?
The U.S. Federal Reserve (the Fed) cut interest rates again—its third such move in as many meetings—lowering its benchmark rate to a target range of 1.50% to 1.75%.
How Philanthropic Planning Retains Assets
Your client's heirs will fire you as often as 90% of the time within one year of your client's death because they have no relationship with you. Arlene Cogen explains how to bridge those relationships and retain assets.
Does the Investment Performance of Robo Advisors Matter?
The conventional wisdom around digital advice platforms – what are commonly referred to as “robo advisors” – is that they will commoditize the investment process, and push traditional, human advisors to justify the value they add – and, hence, justify their fees – with services other than investment management. So far, however, the performance results of those platforms have been unimpressive. What do those results bode for the future of digital advice?
The Tough Truth About a Profitable Practice
Growing your practice isn’t just about good marketing. If you’re looking to make a better impression outwards, look inwards first at the foundation of any future growth – your profitability. The need to achieve profitability is something that most business owners take for granted. But for financial advisors, achieving that goal is especially important, as my guest, Jim Palumbo, explains.
What's Behind the Surge in RIA M&A Activity?
Merger and acquisition (M&A) activity in the wealth management profession has reached record levels this year, highlighted by mega-deals such as the acquisition of United Capital by Goldman Sachs. Indeed, the total AUM of deals more than doubled since 2018, according to some reports. My guest today is David DeVoe, who will help us understand what is behind that trend, whether it will continue and what advisors should consider if they want to position themselves for a sale.
The Power of Top Down: 7 Implications for Em Equity Investors
Welcome to Emerging Markets! A huge array of economies all at various stages of development and maturity with different capital market structures. Add in as many different currencies, political frameworks and policy stances and the result is a complex, diverse, evolving and inefficient market universe.
Inexpensive Technology That Can Transform Your Practice
Most advisors tell you they are “tech savvy” and utilize the latest technology. That may be true, but I have a couple of suggestions you may not have considered.
Where the Davis Funds is Finding Great Opportunities
Chris Davis is chairman of Davis Advisors, a firm founded by his father that has followed the same value-investing discipline for its 50-year history. In this interview, Chris discusses the exceptional opportunities he is finding among the financial stocks, how financial advisors can add the greatest value and the biggest changes he has seen over his career.
How to Attract 70 Ultra-High Net Worth Clients
Many of you read my article about the “70 deep model,” which explained the paradigm for a practice serving 70 or fewer clients with deep, high-touch service that commands a higher price. Here is how to develop those relationships.
Weekly Market Snapshot
It was a thin week for economic data. Both new and existing home sales were reported lower in September, although the trends are generally higher. Durable goods orders fell 1.1% in September, reflecting the strike at GM and ongoing problems at Boeing. Ex-transportation, orders slipped 0.3%, with mixed results across industries.
The Opportunities Go to Those Who Can See Past the Negative Headlines
We focus on fundamentals such as moving averages and standard deviation. We follow leading indicators such as the purchasing manager’s index (PMI) and consumer confidence index. These factors are many times more effective than the headline news at shining a light on the right path.
Weekly Investment Strategy
The 115th World Series began this week, the culmination of a 162-game regular season. While this season is long relative to other sports, the Investment Strategy season never ends. We are constantly evaluating economic and market data and ensuring that our forecasts, strategies, and outlooks are prepared for ‘primetime.’
When Yields Talk, Sectors Listen
For certain sectors, a change in interest rates has a relatively large impact—and that impact has increased significantly in the “new normal” environment of low interest rates.
Economic Brief - A Field Guide to Recessions (updated)
The National Bureau of Economic Research (NBER) defines a recession as “a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.
Templeton Global Macro: An Update on our ESG Scores
This update contains a brief background on our ESG philosophy as well as an update on our methodology, notably including an improvement we made to adjust from overweighting S and G factors in previous iterations to an equal weighting of each of the E, S and G factors going forward.
Q3 2019 Equity Manager Report: Are Growth Concerns Growing?
Are equity managers reconsidering their exposure to more expensive growth stocks? Check out the latest insights from our manager research team.
Staying Humble, Focused on the Long Term
Although the relative performance of the Wasatch investment strategies was mixed during the third quarter — some strategies were a bit ahead of their benchmarks and some were a bit behind— the 2019 year-to-date and longer-term results (i.e., five years) have been exceptional across most of our strategies.
Fascinating Research on the Impact of Your Clothes (and Your Shoes)
New research confirms that the impact of what we wear on first impressions is indisputable.
10 Enhancements to Financial Advice
This year, Dimensional is celebrating 30 years of working with financial advisors. In recognition, this week its co-CEO, Dave Butler, shares with our readers 30 ways the advisory profession has evolved over that period. In the first of three installments, here are the 10 enhancements to financial advice.
I have always loved Boston. My first recollection of the city was when my parents and I used to fly into it spend a night, or two, and then head for our house in Nantucket. Boy, I wish I still had that house. In later life we use to visit the city to see portfolio managers with Fidelity of particular interest.
The Most Important Insurance Your Clients May Not Have
Despite its importance, insurance risks are often overlooked. And it is my experience that one of the most overlooked risks is excess personal liability insurance – coverage provided by an umbrella policy.
If You’re Not Long, You’re Wrong
I remain bullish going forward despite signs that the world could be facing its worst economic slowdown since the financial crisis. The reason for my bullishness is simple: Bad news is good news.
Safety-First Retirement Planning
It is important to understand the complex way insurance products work for retirement income. Here is a list of important questions to answer for the three major types of annuity products.
Forecasting the Future: Part 2
The primary purpose of this article on the importance of forecasting the future results of a business is offered to illustrate the conceptual validity of forecasting earnings (and every other metric) as the key to long-term investor success.