We hope you enjoy Harold Evensky's latest NewsLetter.
Many investors think there are only two options in a market where participants have become overly exuberant, either 'I want in' or 'Get me out.' Our strategies are more nuanced, and we believe fit better with what we expect to transpire.
I offer 15 explanations for the bubble in stock prices and a single explanation for the one in bond prices. Those bubbles could deflate for any of 10 reasons I also identify, severely diminishing the retirement savings of baby boomers.
Joe Biden’s administration has dedicated its first few weeks in office to spending more money on pandemic relief -- and shrugged off warnings that the economy may overheat as a result.
Fortunately, human behavior has a history of repeating itself at extremes. The worst buying decisions are made at the top. Just like bonds, the convexity is true when yields rise going forward. It’s a slippery slope and could be vexing.
2021 has certainly started off interesting. From Reddit readers chasing the most heavily shorted stocks, to the new Administration discussing more stimulus, investors have had plenty to deal with. A market review seems appropriate as the bulls seem to remain bulletproof even as the mania grows.
The Fed recognizes their ongoing monetary interventions have created financial risks in terms of asset bubbles. They are also aware that most policy tools are likely ineffective at mitigating financial risks in the future. Such leaves them being dependent on expanding their balance sheet as their primary weapon.
For all Millennial readers, if you visited a casino in your lifetime only to see your money quickly disappear, you have not seen anything compared to trading versus professionals. So to all you Robinhood traders I say, “Welcome to the Jungle.”
The 2020s are going to be about rifle shots, not the shotgun approach of index funds.
The forceful rise of the markets from March depths continued in the fourth quarter. After stalling out in early Fall, market participants floored the accelerator in November with vaccine approval in tow and the election overhang in the rearview.
Venezuela’s hyperinflation, Japan’s experiment in MMT and China’s rise to global leadership carry ominous lessons for the U.S. and investors in its markets.
“Maybe this time is different. Those words, supposedly the most dangerous to utter in the investing realm, came to mind amid the frenzied pops in the highly anticipated initial public offerings recently.” That quote was from Randall Forsyth discussing why the current market mania reminds him of the “Shades of 1999.”
The two Georgia Senate runoff races on January 5 will be among the most important elections in our lifetimes, whether you are a conservative or a liberal. As a result, enormous and unprecedented amounts of outside money are gushing into these runoffs.
Managed accounts are a solution to financial security, not a “threat.”
The growing use of managed accounts within 401(k) plans is threatening the financial security of plan participants and the integrity of those advisors who recommend them.
For those interested in investing in disruptive technologies, the path can be both rewarding and complex. Capturing the growth of robotics, AI, and healthcare tech requires in-depth research paired with a diversified approach. In this webinar, you’ll learn about the companies at the forefront of this technology revolution and how to gain exposure with three unique, global portfolios.
Join ROBO Global for a discussion on the best ways for investors to capitalize on the robotics, AI, and healthcare tech revolution.
Key takeaways include:
My wife brought me a box of ornaments that my mother has given to us over the years. I decided to check what I could sell them for on eBay (EBAY). What a great way to look at what is going on in equity capital markets!
A new normal is the norm. Changes are inevitable and therefore imaginable, even during this era of ever-growing technological breakthroughs such as cryptocurrencies, blockchain, robo-everything, 5G, EVs, AVs, AI, VR, AR, and IoT.1 We remember when ecosystem referred to a Costa Rican rain forest.
Restaurants already endured lengthy shutdowns that hobbled the industry. Now, a new wave of bans on indoor dining from Philadelphia to Seattle is threatening the weakened industry.
As investors look for signs of a return to normalcy from the coronavirus crisis, they have a dizzying array of indicators to choose from. We’ve assembled a group of signals, with the help of big data, that may point the way.
History does not repeat, but it rhymes, as Mark Twain observed. As such, we are struck by the eerie and dangerous parallels between today’s markets and the markets back in 1999. Back then, Value investing and Value managers were under the gun for having underperformed their Growth brethren for too long.
With just two days remaining before the final votes are cast, President Donald Trump’s obstacles to re-election look insurmountable. The pandemic he wished would miraculously go away is entering its third wave.
Clients are surprised when I request copies of their tax returns. But when they see the process I use to save them money – tax “alpha” – they often wish April 15 came more often.
I meet few humble advisors. Most are supremely confident in their knowledge of all things financial. This confidence is rarely justified.
We would like to think that investing is a science, but, alas, it is not. Water freezes at 32 degrees. Light travels at 186,000 miles per second. We look for similar rules in investing. There are none.
We are earlier than usual this month because of the upcoming presidential election. See why a US constitutional crisis could unfold in the days and weeks to come if Trump delivers on his earlier ‘promise’ not to accept the outcome, should he lose on the 3rd November.
Jeremy Grantham has made a science of studying asset bubbles, correctly predicting the path of the Japanese, dot-com and housing overvaluations. Today’s bubble in U.S. equities is unlike any other, he says, but it will burst in months, if not weeks.
Gun sales in the US have gone through the roof in 2020, especially since the widespread protests turned violent last spring in many large cities across the US. Over three million more guns have been sold since March than occurred in the same period a year ago.
To some critics, Trump’s behavior and decision-making process may seem erratic, but I believe they make a sort of sense when viewed through the lens of game theory.
There are nine reasons Trump may still win, but none seem likely.
The amount of outstanding debt, and the subsequent deficit, has long been a problem in the U.S. For the last two decades, policymakers have made annual promises for more substantial economic growth. Yet with each passing year, growth rates weaken, and economic prosperity worsens.
For at least a generation, conservatives have cared about the courts a lot more than liberals have.
Three of the best advisory firms teach us about programming with intentionality and purpose.
This “exodus,” as some are already calling it, may end up being among the biggest in U.S. history, or at least the biggest since the 1950s and 60s. A record 27.4 percent of homebuyers sought to move out of their metro areas in the second quarter, according to Redfin data.
At a time when some Americans are being tempted to pour their savings into risky investments, the son of a Wall Street veteran is encouraging them to set aside more money.
Given the upcoming election, advisors are going to be hijacked into awkward political conversations with clients. Here are five ways to handle those cringey dialogues you just don’t want to have.
We’ll be okay, but we’ll have problems first. Both can be true; the difference is in the timing. It’s important to keep this straight in our minds. Extreme things can happen, for either good or bad, but they don’t last forever. We have to maintain mental balance between the extremes.
The world’s second-largest money manager said it will instead focus on individual investors in faster-growing parts of Asia, including mainland China.
A paradox of this economic crisis is that while U.S. unemployment remains high, the net worth of American households may be at a record, thanks to the soaring prices of stocks and homes.
We have a big economic calendar with reports on inflation, small business optimism, retail sales, consumer confidence, and unemployment claims. I expect the data to continue occupation of the back seat.
The 62-year-old has been taking the world of business and finance to task for its role in systemic racism for longer than most. Now she and her team have hatched a new game plan.
Several months into the Covid-19 era, Howard Marks takes a step back to consider the global health crisis, the economic fallout and the U.S.’s response to date. He also shines light on how one might – or might not – view the current circumstances in the framework of a market cycle.
What we’re seeing in our big cities today is unprecedented. No one knows where this violence is headed, how to stop it, or when it will end. We’ve turned a new corner in our country, and I don’t think anyone knows for sure where it will lead us. It is certainly not a good direction.
This part two of a series of discussions about how the issues of banking, taxation and slavery became intertwined and how the debate over the national currency and the national debt that the Civil War produced would shape what we think of as an entirely modern idea - a central reserve bank.
In this week’s “Technically Speaking,” the “Golden Cross” arrives, but are the bulls safe? As noted two weeks ago, is the 50/200 dma crossover is historically bullish for equities. However, with markets facing one of the worst earnings declines on record, could overly exuberant investors be walking into a trap?
The COVID-19 pandemic has brought major changes to how advisors are working with clients, especially based on the comments we received during our recent webinar, “How the Pandemic Has Changed Advisory Practices.”
With markets extremely difficult and volatile as we work through COVID-19, we thought it would be good to review important parts of our investment discipline. One way to do that is to consider stocks we found via our eight criteria for stock selection and did not keep long enough to get to their ultimate rewards.
Rick Rieder, Russ Brownback and Trevor Slaven contend that in the tug-of-war between the considerable economic damage stemming from the coronavirus and subsequent lockdowns, and the fiscal and monetary policy responses put in place, the latter factor is being underestimated by markets. Further, the instruments used by investors in previous years won’t be what’s required for the time ahead.
The common characterization of US-China relations as a new Cold War is wrong. Instead, the most recent spike in tensions between the two countries – the second time this has happened since US President Donald Trump took office in 2016 – is primarily motivated by political considerations ahead of the November US presidential election.
Read Harold Evensky's latest NewsLetter.
Recently, Advisor Perspectives published two articles based on the data found in The Robo Report regarding the performance of robo advisors compared to our normalized benchmark. We feel it is important to introduce our perspective on the data in our report and respond to the conclusions drawn in those articles.
He explains why even someone like himself — who has spent a lot of time around hyper-rational people who respected him, knew where he went to school and how much money he made — shares the feeling of being demoralized.
The selloff this week was “perfectly normal,” according to the math. Find out why it makes sense to have a long-term investment horizon.
It will go down as the wildest of the shale wildcatters, the overreaching pioneer of fracking techniques that minted vast fortunes and, now, have left behind ruin.
From a performance perspective, I give robos an “A” for being average, and hope that future research can make more meaningful statements as to how robos truly impact investor outcomes.
Fatal police encounters fueling protests nationwide have prompted executives from almost every major bank and investment firm to speak out. And behind the scenes, it’s driving conversations in an industry that wants to be viewed as more socially responsible, even as it struggles to deliver on promises to improve diversity within its ranks.
Robo-advisors faced their first big challenge with the bear market in the first quarter of 2020. They lost, and that is an ominous sign for the future of automated advice.
The company is taking on the country’s large banks with services that will include a discount brokerage and robo adviser.
I examine new research that offers a way to algorithmically determine how to draw down one’s savings.
The economic calendar is packed with important reports. In normal times we would all be very interested, but the times are far from normal. Several of the reports emphasize April data, the first full impacts of the pandemic and shutdowns.
What is the value of a financial advisor in 2020? We believe financial advisors have never been more valuable than they are right now. This annual Value of an Advisor study quantifies that dedication and the resulting benefit.
The economic calendar includes several important releases, but few reflect the COVID19 effects. Everyone knows the economic news is dismal. Just how dismal does not seem to matter.
Vanguard Group and Ant Financial’s joint venture is rolling out a new robo advisor to target the Chinese fintech giant’s 900 million users.
It was big news last fall when Joe Namath was on the airwaves promoting his “excellent, free” Medicare plan. Here’s what to tell your clients when they ask about it.
Since the market downturn began, TD Ameritrade has seen new-account openings for its automated investing platform jump 150%.
The coronavirus will accelerate the changes to the wealth management industry predicted by McKinsey & Co.
Quarterly commentary giving an overview of the markets and the importance of having and implementing a strategy when investing in the markets.
In a world at war with the coronavirus, your worst enemy is the game your mind plays with itself.
Growing policy responses reflect greater estimates of the costs of COVID-19.
Unfortunately, the premise underlying your advice may be flawed. You might be doing your clients (and yourself) a terrible disservice.
Advisors can better serve their clients on one of the most important investments they will ever make – their family’s education.
We have a full economic calendar. Only the FOMC decision will get major market attention. Initial jobless claims provide a post-virus look at the job market. Housing data remains interesting. Despite this, the media focus will remain on the coronavirus crisis.
Many questions – and few answers – surround the coronavirus epidemic and its implications for financial markets. Read Howard Marks’s latest memo, in which he shares his own questions, guesses, observations and inferences to help make sense of the potential impact of the virus on global economies and markets.
With the markets shell shocked by of the worst weeks on record, analysts are split on whether investors are simply overreacting to the coronavirus epidemic or if we are confronting an actual existential threat to the global economy.
I’m teaching my kids how to read books. But it’s just as important for them to know how to read people. The truth is communicated loud and clear through nonverbal cues; most of the time we aren’t listening.
On how the investment industry commercialized “socially responsible investing,”On how financial marketers built a mythology around the analytical tool ‘ESG,’On how the United Nations abetted the sale of private profit as public good,And why these triumphs of free enterprise obstruct progress on climate change.
For many investors, the beginning of the year is a time for them to review their investing strategies and reassess their risk tolerance. Though the U.S. stock markets have been on an incredible run last year, recent polls of economists and American voters indicate great concern about a looming recession.
As you will see today, sometimes I get it really, badly, completely wrong. Thankfully, not too often.
Trump's decision to take out the Islamic Republic's most celebrated military leader, Qassem Soleimani, was a timely reminder that we face many problems. An armed conflict between the US and Iran is clearly one of them but far from the only one. Here is a list of the ones we worry mostly about, going into 2020.
Bob was in Mumbai last week to speak at the iFast conference to a group of approximately 150 independent advisors based in India. His talk covered the state of the digital-advice (“robo”) industry, based in part on research that has appeared in Advisor Perspectives.
A brainstorming session hosted by the CFP Board on December 13 offered a look at how the planning profession will evolve over the next 10 years. Here’s a view of the landscape in 2030 and what it will take to get there.
Did you know that more than $12 trillion in assets under management are engaged in one or more strategies of sustainable investment in the United States? This comprises more than 25 percent of the professional managed assets across the country and is a 38 percent growth from 2016 figures.
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.
What can advisors do to be more transparent or communicate better?
Nearly every aspect of the advisory industry is undergoing some form of transformation today—spelling an opportunity for those advisors who are committed to continuously evolving their approach.
Should you be comfortable referring your clients to CPAs or other professionals who also handle annuities, investments and insurance?
RIA investment platforms – specifically the vehicles and tools they use to manage client portfolios – are about to undergo the most profound change in a generation. With the race to zero for trading stocks, mutual funds are becoming outdated. Customized portfolios of individual stocks will be the winner.
When the US and ultimately the rest of the Western world began to engage China, resulting in China finally being allowed into the World Trade Organization in the early 2000s, no one really expected the outcomes we see today. There is no simple disengagement path, given the scope of economic and legal entanglements. This isn’t a “trade” we can simply walk away from. But it is also one that, if allowed to continue in its current form, could lead to a loss of personal freedom for Western civilization. It really is that much of an existential question.
The evidence is overwhelming that automation has positively impacted total factor productivity (TFP) for years, i.e. GDP growth continues to benefit from the digital revolution despite the fact GDP growth is rather pedestrian these years.
Robo Advisors
NewsLetter - February 2021
We hope you enjoy Harold Evensky's latest NewsLetter.
Spectate or Speculate
Many investors think there are only two options in a market where participants have become overly exuberant, either 'I want in' or 'Get me out.' Our strategies are more nuanced, and we believe fit better with what we expect to transpire.
15 Explanations for the Bubble in Stock Prices
I offer 15 explanations for the bubble in stock prices and a single explanation for the one in bond prices. Those bubbles could deflate for any of 10 reasons I also identify, severely diminishing the retirement savings of baby boomers.
Biden Presidency Starts With a Giant Bet on Run-It-Hot Economics
Joe Biden’s administration has dedicated its first few weeks in office to spending more money on pandemic relief -- and shrugged off warnings that the economy may overheat as a result.
Vexing Today’s Convex Pricing Behavior
Fortunately, human behavior has a history of repeating itself at extremes. The worst buying decisions are made at the top. Just like bonds, the convexity is true when yields rise going forward. It’s a slippery slope and could be vexing.
Bull Mania & The Charge Of The Light Brigade
2021 has certainly started off interesting. From Reddit readers chasing the most heavily shorted stocks, to the new Administration discussing more stimulus, investors have had plenty to deal with. A market review seems appropriate as the bulls seem to remain bulletproof even as the mania grows.
The Fed, Zombies, & The Pathway To Japanification
The Fed recognizes their ongoing monetary interventions have created financial risks in terms of asset bubbles. They are also aware that most policy tools are likely ineffective at mitigating financial risks in the future. Such leaves them being dependent on expanding their balance sheet as their primary weapon.
Welcome to the Jungle
For all Millennial readers, if you visited a casino in your lifetime only to see your money quickly disappear, you have not seen anything compared to trading versus professionals. So to all you Robinhood traders I say, “Welcome to the Jungle.”
Forecast 2021: The Stock Market
The 2020s are going to be about rifle shots, not the shotgun approach of index funds.
Winter Quarterly Commentary
The forceful rise of the markets from March depths continued in the fourth quarter. After stalling out in early Fall, market participants floored the accelerator in November with vaccine approval in tow and the election overhang in the rearview.
Ominous Lessons from Venezuela, Japan and China
Venezuela’s hyperinflation, Japan’s experiment in MMT and China’s rise to global leadership carry ominous lessons for the U.S. and investors in its markets.
Shades Of 1999 As “Market Mania” Returns In 2020
“Maybe this time is different. Those words, supposedly the most dangerous to utter in the investing realm, came to mind amid the frenzied pops in the highly anticipated initial public offerings recently.” That quote was from Randall Forsyth discussing why the current market mania reminds him of the “Shades of 1999.”
Georgia Runoffs To Decide Direction Of The Country
The two Georgia Senate runoff races on January 5 will be among the most important elections in our lifetimes, whether you are a conservative or a liberal. As a result, enormous and unprecedented amounts of outside money are gushing into these runoffs.
401(k) Managed Accounts Are a Solution to Financial Security, Not a “Threat”
Managed accounts are a solution to financial security, not a “threat.”
The Threat of Managed Accounts for Plan Advisors
The growing use of managed accounts within 401(k) plans is threatening the financial security of plan participants and the integrity of those advisors who recommend them.
Investing in Disruptive Tech: Capturing the Growth of Robotics, AI & Health Tech
For those interested in investing in disruptive technologies, the path can be both rewarding and complex. Capturing the growth of robotics, AI, and healthcare tech requires in-depth research paired with a diversified approach. In this webinar, you’ll learn about the companies at the forefront of this technology revolution and how to gain exposure with three unique, global portfolios.
Join ROBO Global for a discussion on the best ways for investors to capitalize on the robotics, AI, and healthcare tech revolution.
Key takeaways include:
Reminiscences of an eBay Operator
My wife brought me a box of ornaments that my mother has given to us over the years. I decided to check what I could sell them for on eBay (EBAY). What a great way to look at what is going on in equity capital markets!
The New Abnormal
A new normal is the norm. Changes are inevitable and therefore imaginable, even during this era of ever-growing technological breakthroughs such as cryptocurrencies, blockchain, robo-everything, 5G, EVs, AVs, AI, VR, AR, and IoT.1 We remember when ecosystem referred to a Costa Rican rain forest.
Indoor Dining Goes Dark Across U.S., Deepening Restaurants’ Pain
Restaurants already endured lengthy shutdowns that hobbled the industry. Now, a new wave of bans on indoor dining from Philadelphia to Seattle is threatening the weakened industry.
Crisis Dashboard: Big Data Helps Paint the Big Picture (November Update)
As investors look for signs of a return to normalcy from the coronavirus crisis, they have a dizzying array of indicators to choose from. We’ve assembled a group of signals, with the help of big data, that may point the way.
Tonight, We Leave the Party Like It’s 1999
History does not repeat, but it rhymes, as Mark Twain observed. As such, we are struck by the eerie and dangerous parallels between today’s markets and the markets back in 1999. Back then, Value investing and Value managers were under the gun for having underperformed their Growth brethren for too long.
Three Words That Haunt Joe Biden: ‘Dewey Defeats Truman’: Niall Ferguson
With just two days remaining before the final votes are cast, President Donald Trump’s obstacles to re-election look insurmountable. The pandemic he wished would miraculously go away is entering its third wave.
How to Generate Alpha from Clients’ Tax Returns
Clients are surprised when I request copies of their tax returns. But when they see the process I use to save them money – tax “alpha” – they often wish April 15 came more often.
Being Humble is Better than Being Right
I meet few humble advisors. Most are supremely confident in their knowledge of all things financial. This confidence is rarely justified.
Don’t Believe the Rules in Investing
We would like to think that investing is a science, but, alas, it is not. Water freezes at 32 degrees. Light travels at 186,000 miles per second. We look for similar rules in investing. There are none.
A Constitutional Crisis in the Making?
We are earlier than usual this month because of the upcoming presidential election. See why a US constitutional crisis could unfold in the days and weeks to come if Trump delivers on his earlier ‘promise’ not to accept the outcome, should he lose on the 3rd November.
Jeremy Grantham: The Market Bubble Will Burst in Weeks or Months
Jeremy Grantham has made a science of studying asset bubbles, correctly predicting the path of the Japanese, dot-com and housing overvaluations. Today’s bubble in U.S. equities is unlike any other, he says, but it will burst in months, if not weeks.
Gun Sales Break Records In 2020... But Why?
Gun sales in the US have gone through the roof in 2020, especially since the widespread protests turned violent last spring in many large cities across the US. Over three million more guns have been sold since March than occurred in the same period a year ago.
Some Are Betting on Red, Some on Blue. I'm Betting on Gold
To some critics, Trump’s behavior and decision-making process may seem erratic, but I believe they make a sort of sense when viewed through the lens of game theory.
Niall Ferguson: A Craving for Normalcy Spells the End of a Populist Presidency
There are nine reasons Trump may still win, but none seem likely.
CBO – The “One-Way Trip” Of American Debt
The amount of outstanding debt, and the subsequent deficit, has long been a problem in the U.S. For the last two decades, policymakers have made annual promises for more substantial economic growth. Yet with each passing year, growth rates weaken, and economic prosperity worsens.
Why Conservatives Care More About the Supreme Court
For at least a generation, conservatives have cared about the courts a lot more than liberals have.
Three Advisor Programs that Drive Client Engagement
Three of the best advisory firms teach us about programming with intentionality and purpose.
The Urban-to-Suburban Exodus May Be the Biggest in 50 Years
This “exodus,” as some are already calling it, may end up being among the biggest in U.S. history, or at least the biggest since the 1950s and 60s. A record 27.4 percent of homebuyers sought to move out of their metro areas in the second quarter, according to Redfin data.
Startup Bets People Will Save Money for a Chance to Win $10 Million
At a time when some Americans are being tempted to pour their savings into risky investments, the son of a Wall Street veteran is encouraging them to set aside more money.
A Five-Step Plan for Awkward Political Conversations
Given the upcoming election, advisors are going to be hijacked into awkward political conversations with clients. Here are five ways to handle those cringey dialogues you just don’t want to have.
Light in the COVID Tunnel
We’ll be okay, but we’ll have problems first. Both can be true; the difference is in the timing. It’s important to keep this straight in our minds. Extreme things can happen, for either good or bad, but they don’t last forever. We have to maintain mental balance between the extremes.
Vanguard to End Presence in Hong Kong, Japan With Job Cuts
The world’s second-largest money manager said it will instead focus on individual investors in faster-growing parts of Asia, including mainland China.
America’s Secret Economic Weapon
A paradox of this economic crisis is that while U.S. unemployment remains high, the net worth of American households may be at a record, thanks to the soaring prices of stocks and homes.
Economic Sunrise?
We have a big economic calendar with reports on inflation, small business optimism, retail sales, consumer confidence, and unemployment claims. I expect the data to continue occupation of the back seat.
Asset Manager Who Pushed NFL Team Rebrand Shifts Focus
The 62-year-old has been taking the world of business and finance to task for its role in systemic racism for longer than most. Now she and her team have hatched a new game plan.
Time for Thinking
Several months into the Covid-19 era, Howard Marks takes a step back to consider the global health crisis, the economic fallout and the U.S.’s response to date. He also shines light on how one might – or might not – view the current circumstances in the framework of a market cycle.
Gun Sales Skyrocketing, Big Banks Hoarding Cash - Why?
What we’re seeing in our big cities today is unprecedented. No one knows where this violence is headed, how to stop it, or when it will end. We’ve turned a new corner in our country, and I don’t think anyone knows for sure where it will lead us. It is certainly not a good direction.
Martin Van Buren and Andrew Jackson Organize a Tea Party Part Two
This part two of a series of discussions about how the issues of banking, taxation and slavery became intertwined and how the debate over the national currency and the national debt that the Civil War produced would shape what we think of as an entirely modern idea - a central reserve bank.
Technically Speaking: “Golden Cross” Arrives, Are The Bulls Safe?
In this week’s “Technically Speaking,” the “Golden Cross” arrives, but are the bulls safe? As noted two weeks ago, is the 50/200 dma crossover is historically bullish for equities. However, with markets facing one of the worst earnings declines on record, could overly exuberant investors be walking into a trap?
How to Have a Strong Pipeline in Spite of the Pandemic
The COVID-19 pandemic has brought major changes to how advisors are working with clients, especially based on the comments we received during our recent webinar, “How the Pandemic Has Changed Advisory Practices.”
Sins of Omission
With markets extremely difficult and volatile as we work through COVID-19, we thought it would be good to review important parts of our investment discipline. One way to do that is to consider stocks we found via our eight criteria for stock selection and did not keep long enough to get to their ultimate rewards.
Today’s Portfolios “Can’t Get No Satisfaction” From Yesterday’s Instruments
Rick Rieder, Russ Brownback and Trevor Slaven contend that in the tug-of-war between the considerable economic damage stemming from the coronavirus and subsequent lockdowns, and the fiscal and monetary policy responses put in place, the latter factor is being underestimated by markets. Further, the instruments used by investors in previous years won’t be what’s required for the time ahead.
The China Witch Hunt
The common characterization of US-China relations as a new Cold War is wrong. Instead, the most recent spike in tensions between the two countries – the second time this has happened since US President Donald Trump took office in 2016 – is primarily motivated by political considerations ahead of the November US presidential election.
NewsLetter - June 2020
Read Harold Evensky's latest NewsLetter.
Perspective on Robo Advisor Performance
Recently, Advisor Perspectives published two articles based on the data found in The Robo Report regarding the performance of robo advisors compared to our normalized benchmark. We feel it is important to introduce our perspective on the data in our report and respond to the conclusions drawn in those articles.
A Goldman Executive Has Advice for His White Colleagues
He explains why even someone like himself — who has spent a lot of time around hyper-rational people who respected him, knew where he went to school and how much money he made — shares the feeling of being demoralized.
The Math Is on Investors’ Side
The selloff this week was “perfectly normal,” according to the math. Find out why it makes sense to have a long-term investment horizon.
Chesapeake’s Demise Marks End of Shale Model That Changed the World
It will go down as the wildest of the shale wildcatters, the overreaching pioneer of fracking techniques that minted vast fortunes and, now, have left behind ruin.
Robos Haven’t Failed – They Get an "A" for Being Average
From a performance perspective, I give robos an “A” for being average, and hope that future research can make more meaningful statements as to how robos truly impact investor outcomes.
Financial Executives Weigh In On Protests
Fatal police encounters fueling protests nationwide have prompted executives from almost every major bank and investment firm to speak out. And behind the scenes, it’s driving conversations in an industry that wants to be viewed as more socially responsible, even as it struggles to deliver on promises to improve diversity within its ranks.
Robos Fail Their First Big Test
Robo-advisors faced their first big challenge with the bear market in the first quarter of 2020. They lost, and that is an ominous sign for the future of automated advice.
Morgan Stanley to Expand Wealth-Management Business Into Canada
The company is taking on the country’s large banks with services that will include a discount brokerage and robo adviser.
Can Withdrawal Strategies Be Customized for Clients?
I examine new research that offers a way to algorithmically determine how to draw down one’s savings.
Should Investors Become Traders?
The economic calendar is packed with important reports. In normal times we would all be very interested, but the times are far from normal. Several of the reports emphasize April data, the first full impacts of the pandemic and shutdowns.
5 Key Ways Advisors Deliver Value in the Face of 2020's Adversities
What is the value of a financial advisor in 2020? We believe financial advisors have never been more valuable than they are right now. This annual Value of an Advisor study quantifies that dedication and the resulting benefit.
Good Questions but Poor Answers
The economic calendar includes several important releases, but few reflect the COVID19 effects. Everyone knows the economic news is dismal. Just how dismal does not seem to matter.
Vanguard Targets 900 Million Users With Robo Advisor
Vanguard Group and Ant Financial’s joint venture is rolling out a new robo advisor to target the Chinese fintech giant’s 900 million users.
Should You Buy a Medicare Plan from Joe Namath?
It was big news last fall when Joe Namath was on the airwaves promoting his “excellent, free” Medicare plan. Here’s what to tell your clients when they ask about it.
Robo Advisors Gain New, Younger Clients Amid Market Turmoil
Since the market downturn began, TD Ameritrade has seen new-account openings for its automated investing platform jump 150%.
McKinsey’s Vision of Wealth Management in 2030
The coronavirus will accelerate the changes to the wealth management industry predicted by McKinsey & Co.
Two Roads Diverged...
Quarterly commentary giving an overview of the markets and the importance of having and implementing a strategy when investing in the markets.
The Soldier
In a world at war with the coronavirus, your worst enemy is the game your mind plays with itself.
Policy Responses Take Shape, Emerging Markets at Risk, and Why We Hoard
Growing policy responses reflect greater estimates of the costs of COVID-19.
COVID-19 Brings Policy Responses, Risks to Emerging Markets, and Hoarding
Growing policy responses reflect greater estimates of the costs of COVID-19.
Flawed Market Crisis Advice
Unfortunately, the premise underlying your advice may be flawed. You might be doing your clients (and yourself) a terrible disservice.
A Guide to Helping Clients with Education Savings
Advisors can better serve their clients on one of the most important investments they will ever make – their family’s education.
A Pundit’s Paradise – Anyone Can Play
We have a full economic calendar. Only the FOMC decision will get major market attention. Initial jobless claims provide a post-virus look at the job market. Housing data remains interesting. Despite this, the media focus will remain on the coronavirus crisis.
Nobody Knows II
Many questions – and few answers – surround the coronavirus epidemic and its implications for financial markets. Read Howard Marks’s latest memo, in which he shares his own questions, guesses, observations and inferences to help make sense of the potential impact of the virus on global economies and markets.
The Problem Is the Bubble, Not the Pin
With the markets shell shocked by of the worst weeks on record, analysts are split on whether investors are simply overreacting to the coronavirus epidemic or if we are confronting an actual existential threat to the global economy.
Body Language That Screams “I’m Lying”
I’m teaching my kids how to read books. But it’s just as important for them to know how to read people. The truth is communicated loud and clear through nonverbal cues; most of the time we aren’t listening.
On Climate and Conscience: An Essay and Pamphlet
On how the investment industry commercialized “socially responsible investing,”
On how financial marketers built a mythology around the analytical tool ‘ESG,’
On how the United Nations abetted the sale of private profit as public good,
And why these triumphs of free enterprise obstruct progress on climate change.
Improving Client Experience Through Better Risk Tolerance Assessments
For many investors, the beginning of the year is a time for them to review their investing strategies and reassess their risk tolerance. Though the U.S. stock markets have been on an incredible run last year, recent polls of economists and American voters indicate great concern about a looming recession.
Dismissing the Experts
As you will see today, sometimes I get it really, badly, completely wrong. Thankfully, not too often.
The Known Unknowns of 2020
Trump's decision to take out the Islamic Republic's most celebrated military leader, Qassem Soleimani, was a timely reminder that we face many problems. An armed conflict between the US and Iran is clearly one of them but far from the only one. Here is a list of the ones we worry mostly about, going into 2020.
A Bit About Bob
Bob was in Mumbai last week to speak at the iFast conference to a group of approximately 150 independent advisors based in India. His talk covered the state of the digital-advice (“robo”) industry, based in part on research that has appeared in Advisor Perspectives.
A View of the Planning Profession in the Year 2030
A brainstorming session hosted by the CFP Board on December 13 offered a look at how the planning profession will evolve over the next 10 years. Here’s a view of the landscape in 2030 and what it will take to get there.
Advisors and Clients Walking past Each Other on Sustainable Investment
Did you know that more than $12 trillion in assets under management are engaged in one or more strategies of sustainable investment in the United States? This comprises more than 25 percent of the professional managed assets across the country and is a 38 percent growth from 2016 figures.
Inflationary Angst
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.
Training the Investor Brain: Managing Emotions and Building Your Business
What can advisors do to be more transparent or communicate better?
Evolving Advisors Don’t Fear Change. They Embrace It.
Nearly every aspect of the advisory industry is undergoing some form of transformation today—spelling an opportunity for those advisors who are committed to continuously evolving their approach.
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?
Advisor Investment Platforms on Cusp of Major Transformation
RIA investment platforms – specifically the vehicles and tools they use to manage client portfolios – are about to undergo the most profound change in a generation. With the race to zero for trading stocks, mutual funds are becoming outdated. Customized portfolios of individual stocks will be the winner.
Chinese Chess Game
When the US and ultimately the rest of the Western world began to engage China, resulting in China finally being allowed into the World Trade Organization in the early 2000s, no one really expected the outcomes we see today. There is no simple disengagement path, given the scope of economic and legal entanglements. This isn’t a “trade” we can simply walk away from. But it is also one that, if allowed to continue in its current form, could lead to a loss of personal freedom for Western civilization. It really is that much of an existential question.
How to Invest in a Low Growth World (Part 2 of 2)
The evidence is overwhelming that automation has positively impacted total factor productivity (TFP) for years, i.e. GDP growth continues to benefit from the digital revolution despite the fact GDP growth is rather pedestrian these years.