Short Term Market Forecast

By:  Scott Chan,  Contributing Editor, Leeb's Market Forecast

"...We think stocks will take a breather shortly. We do not subscribe to the theory that investors, en masse, exit the market when it reaches some pre-ordained level or when returns eclipse a certain point. We know plenty of people who, despite the 26%+ year-to-date return in the S&P 500, are more than content to hold on. So we’re not anticipating anything other than a correction primarily because we don’t see a mad rush for the exits developing. Nonetheless, the market’s surge to new record levels has only strengthened our conviction that stocks have entered an overshoot phase that will end in a tactical pullback..."

The views expressed here are that of myself or the cited individual or firm and do not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

 The Jacksonville Business Journal has ranked D2 Capital Management in the top 25 of Certified Financial Planners in Jacksonville.  The Firm is also a member of the Financial Planning Association of Northeast Florida, the Jacksonville Chamber of Commerce, the Southside Businessmen's Club, and the Beaches Business Association. 

Stocks may be less risky than you think

Everyone knows stocks are riskier than bonds. After all, stocks can tumble 40% over the course of a few months while a rough patch for bonds is a 5% slide.

But even if you can't stand the stock market's dips and dives, some recent studies suggest it may make sense to own more stocks — up to 100% of your portfolio — if you don't need the money for 20 years or more.

The benefits of time - "Stocks aren't particularly risky if held for a long time," says Michael Finke, a professor of personal financial planning at Texas Tech University in Lubbock.

Finke recently co-authored a paper, Optimal Portfolios for the Long Run, to answer a classic question: What's the best mix of stocks, bonds and cash for investors with at least 20-year time horizons?

To find out, the researchers crunched 113 years of data on stock returns from 20 industrialized countries. They analyzed the returns across overlapping 20-year periods and plugged in formulas to see what the returns would look like for investors with various appetites for risk. They also factored in the "utility" to an investor of having the highest total portfolio value after 20 years.

The bottom line: To get "optimal" returns, even the most risk-averse investors should hold 71% to 80% in stocks. Moderate-risk investors should hold 81% to 90%, and investors with the highest risk tolerance should go all in, holding 91% to 100% in stocks.

Should you own more stocks? - Finke acknowledges that the study's conclusions may sound "crazy." And they shouldn't be taken as advice to dump your bonds and buy more stocks.

Indeed, while academic research may support loading up on stocks, investors need to consider personal factors.

For example, most advisers suggest trimming stock exposure as investors near retirement age and want more stable returns. If you need regular income, an optimal portfolio may include more bonds or other income-producing investments. And if your holding period is less than 10 years, some advisers suggest owning just 30% in stocks.

It's also crucial to know how you'd react if the market tumbled 30% in a short time — say six months. For many people, an "optimal" portfolio isn't one with the highest value after 20 or 30 years — it's one that lets them sleep at night.

"People care about short-term volatility," says Finke. "It makes them unhappy even if they're not spending the money." For these investors, it may make sense to hold less stocks since that may make them less likely to sell when the market is falling.

Time is on your side - If you can handle the bumps, however, studies do suggest that the risks of owning stocks drop over time.

Statistically, the market's average return typically bounces around by 21.7% over any 12-month period, according to research from Fidelity Investments. But that measure of volatility, called standard deviation, declines to 12% after three years. It drops to 8.8% after five years and dwindles to 1.4% after 30 years, according to Fidelity's research.

Essentially, that makes stock returns more stable than intermediate-term government bonds, which have a 2.5% standard deviation after 30 years.

Why are stock returns so volatile near-term and stable long-term? Investor behavior, for one thing. Despite lots of evidence that stocks are riskier in the near term, the average holding period for U.S. stocks is just one year, says Finke.

People care about short-term volatility. It makes them unhappy even if they're not spending the money."

Further, markets are driven by short-term factors like changes in corporate profits and the outlook for the economy. These things bounce around quite a bit quarter-to-quarter, jostling the market. Eventually, though, economic factors revert to long-term averages and stock returns follow a similar pattern.

Granted, this idea of "time diversification" — above-average returns offsetting below-average returns and lowering the risk of owning stocks over time — is controversial.

Some economists say it doesn't really exist since it would violate basic laws of finance. If the theory is right, they argue, long-term investors can earn higher returns with less risk by owning stocks — getting a free lunch compared to assets like bonds or cash. That idea — getting something for nothing — isn't supposed to happen, according to economic theory.

Yet evidence for time diversification exists in the real world, says Finke. It's been apparent in U.S. stock returns for more than a century, he points out. And there's now evidence for it in global markets, according to his unpublished paper, Optimal Portfolios, co-authored with David Blanchett of Morningstar and Wade Pfau of The American College.

A balanced approach - Even if you're not comfortable holding more stocks there are ways to potentially enhance your returns.

Rebalancing, for example, can boost your long-term results. People have a tendency to become risk-tolerant during bull markets — buying stocks when prices are high. And they grow fearful in bear markets, selling when prices are low. To avoid that mistake, you should set a long-term target mix for your investments and rebalance your portfolio once or twice a year.

Source:  Daren Fonda, Fidelity Investments

The views expressed here are that of myself or the cited individual or firm and do not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

 The Jacksonville Business Journal has ranked D2 Capital Management in the top 25 of Certified Financial Planners in Jacksonville.  The Firm is also a member of the Financial Planning Association of Northeast Florida, the Jacksonville Chamber of Commerce, the Southside Businessmen's Club, and the Beaches Business Association. 

Energy Master Limited Partnerships

Energy MLPs make money off fees charged for moving oil and gas through their pipelines or storage facilities. They're required to pay out more than 90% of their cash flows as distributions to investors, and they currently yield 6%, on average, according to the Alerian MLP Index.

With domestic oil-and-gas production booming, MLPs should generate solid long-term returns, says Curt Pabst, managing director with Eagle Global Advisors, an advisory firm based in Houston that uses MLPs for clients. Many MLPs have hiked their distributions more than 10% this year, he adds, a sign that the industry is "fundamentally healthy."

"They're making more money than most people expected and they're passing that on to investors," he says.

MLP valuations remain reasonable compared to Real Estate Investment Trusts and other "yield investments," adds Pabst. And MLPs usually don't move closely in tandem with traditional stocks and bonds, providing some diversification.

Source:  Darren Fonda, Fidelity Investments

Global X MLP (MLPA) and Global X MLP & Energy Infrastructure (MLPX) are components of the D2 Capital Management Multi-Asset Income Portfolio.  They yield 5.79% and 2.73, respectively (as of 27 November).

The information contained in this article does not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

 

 The Jacksonville Business Journal has ranked D2 Capital Management in the top 25 of Certified Financial Planners in Jacksonville.  The Firm is also a member of the Financial Planning Association of Northeast Florida, the Jacksonville Chamber of Commerce, the Southside Businessmen's Club, and the Beaches Business Association. 

2014 Market Outlook

By:  Jurrien Timmer, Director of Global Macro, and co-manager of Fidelity Global Strategies Fund

Stocks have been on a tear this year. Economic growth remains modest but stable. Earnings growth remains positive but barely so. Valuations are way up, but still at reasonable levels. And investor sentiment is ebullient, to say the least.

But there’s a big disconnect. The stock market is up more than 25% this year, yet earnings growth has slowed to a crawl. How is this possible? Two words: monetary policy. The Fed’s open-ended QE3 program has been a smashing success in bidding up asset prices and reducing volatility.

The other side of the coin, however, is that this steady drip of monetary support has also created a dependency of sorts on easy money. Remember what happened last spring when the Fed started floating around the idea of even a modest tapering? The bond and credit markets went into a tailspin and the stock market slumped as well. Just the expectation of a mere reduction of the amount of asset purchases had such an impact on liquidity, and, in turn, mortgage rates, and, in turn, the economy, that the Fed had to backtrack from its taper threat. Needless to say, investors cheered the news and stocks took off.

Then we got a decent employment report in October, showing a 200+ thousand gain in payroll, as well as an above-consensus third-quarter GDP report. All of a sudden, a December taper was getting priced into the market.

The fears of an early taper, however, were once again calmed when Fed Chair nominee Janet Yellen appeared before Congress recently. She made it clear that the Fed would remain very accomodative until the economy is strong enough to be able to withstand an exit from QE3, and eventually even an increase in interest rates. In so many words, she said that the risk of subpar growth from insufficient QE is greater than the risk of bubbles or financial instability from too much QE.

So as quickly as a December taper was priced in, it was priced back out, and risk assets rallied to higher highs. The S&P 500® has reached 1,800. Few investors would have considered that likely at the beginning of the year.

What it may mean for 2014

So what happens next? How will this all play out in 2014? Will it be the year of the taper or the year of the dove?

Will the economy finally reach so-called escape velocity, i.e., sustained higher growth, as so many economists (including the Fed’s own) have been calling for for so long? If so, will the Fed be able to exit QE and even raise rates, without wreaking havoc on the bond market, and by extension the stock market and the economy?

Or will the economic recovery remain as subpar as it has been for the past few years, forcing the Fed to create an ever larger balance sheet? If QE3 fails to work in accelerating economic growth, could the market become a bubble that will collapse under its own weight? Will the Fed have to keep printing money out of fear that another taper threat will have the same effect as the last one did? What if the Fed’s balance sheet grows to five trillion? Six trillion? Ten trillion? How much is too much? Is the Fed painting itself into an ever tighter corner?

These are important questions. Clearly the Fed is hoping that the economy reaches escape velocity and that it gets a “get out of jail free” card, as it were, to exit QE3 and eventually normalize rates, without incurring a bond market hangover. But what if it doesn’t happen? What’s the exit strategy? I wonder if the Fed has one.

Perhaps this will all end in a bubble, the way the NASDAQ did in 2000 and housing did in 2007. With the way things are going, that scenario is not completely implausible, unless earnings growth reaccelerates or stocks correct long enough to allow the fundamentals to catch up.

The information contained in this article does not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

 

 The Jacksonville Business Journal has ranked D2 Capital Management in the top 25 of Certified Financial Planners in Jacksonville.  The Firm is also a member of the Financial Planning Association of Northeast Florida, the Jacksonville Chamber of Commerce, the Southside Businessmen's Club, and the Beaches Business Association.

High Yield Bonds Remain Attractive

Wes Sparks and Martha Metcalf, respectively head of U.S. fixed income and senior high-yield portfolio manager at Schroders, say non-investment grade bond valuations look like they’re starting to peak, but the market is in the first month of what’s historically its best three-month period of the year:

"...High yield bonds remain attractive versus investment grade credit and other fixed income asset classes for the near-term. Many macro risks have subsided, default risk remains benign, corporate earnings reports so far this quarter have been supportive of current high yield valuations, and technicals are positive and could turn even more positive as supply tapers off into the holidays while institutional investors continue to have demand for yield and dealer inventories remain light.

With the global high yield index trading just inside of a 5.5% yield and a spread of just over four percentage points versus Treasuries, we believe the high yield market is now close to fair value. We expect only modest capital gains from here through year end but positive returns in December primarily due to coupon income. The market has entered a seasonally supportive period: The period from November through January is typically the strongest 3-month period of the calendar year for high yield returns. In fact, returns for the high yield asset class are almost always positive in December – as was the case in 24 out of the past 25 years..."

Schroders adds that demand from high yield mutual fund net inflows and institutional investors should outpace net supply, while the Fed’s increased emphasis on forward guidance as it starts to taper its asset purchases should help soothe markets at a time of tame inflation.

Source:  Michael Aneiro, Barrons

AdvisorShares Peritus High Yield (HYLD) is a component of the D2 Capital Management Multi-Asset Income Portfolio.  It currently has a 7.68% yield (as of 26 November 2013).

The information contained in this article does not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

 

 The Jacksonville Business Journal has ranked D2 Capital Management in the top 25 of Certified Financial Planners in Jacksonville.  The Firm is also a member of the Financial Planning Association of Northeast Florida, the Jacksonville Chamber of Commerce, the Southside Businessmen's Club, and the Beaches Business Association.

Economic underpinnings strengthen as stocks climb

By:  Bob Doll, Chief equity strategist and senior portfolio manager at Nuveen Asset Management.

U.S. equities finished higher again last week as the S&P 500 increased 0.4%. The Federal Reserve continued to dominate headlines, with heightened emphasis on the distinction between tapering and tightening. Bubble speculation continued to receive attention in the press, while many articles refuted such concerns.

Third-quarter earnings results showed an increase in manufacturing activity, as earnings growth in cyclical sectors (excluding energy) outpaced defensive sectors. Every defensive sector lagged the overall S&P 500, while all cyclicals (excluding energy) outpaced the index. Rate-sensitive sectors continued to thrive.

In terms of share price gains, cyclicals have been outperforming defensives since the end of the first quarter, but analysis reveals the outperformance has been based on multiple expansion rather than earnings. This implies cyclical stocks have room to grow if they can build on this quarter's earnings outperformance.

A key development is the apparent acceleration in the growth rate of S&P 500 revenue and earnings. Although one quarter does not make a trend, the third quarter marked the first in six in which revenue growth moved out of a near-zero range. More data is needed to confirm an inflection, but an improvement would support higher stock prices and take pressure off of multiple expansion.

TOP THEMES - Fourth-quarter retail spending is off to a good start: October total retail sales beat expectations and rose 0.4%. Retail sales, along with the relatively positive October employment report, indicate minimal impact from the government shutdown. The data appears to balance some of the downside risk to fourth-quarter economic growth.

We anticipate either another year of sequester or a deal in December, although it is not certain. We intend to plan for upcoming fiscal restraint. Government receipts are still in solid territory, and new deficit projections from the Congressional Budget Office will show even more progress than expected. The Democratic majority in the Senate substantially changed filibuster rules to prevent the Republican minority from blocking Presidential nominees to government agencies. The change includes the Fed and courts other than the Supreme Court. It will enable the Obama administration to use executive branch powers aggressively but could damage the atmosphere in the Senate, making major legislation such as comprehensive immigration reform less likely.

THE BIG PICTURE - Global growth is improving and we believe it will accelerate in 2014. Progress will be underpinned by diminishing fiscal drag, consumer recovery in the United States and Europe and modest increase in corporate capital expenditures. We are more optimistic about China, where recently announced economic and social reforms should improve economic growth and stability.

Risk assets have continued to rally as the Fed and European Central Bank emphasize a commitment to a low-interest-rate environment.

We expect the Fed to taper, or reduce, its asset purchases in the first quarter. We perceive that a repeat of the May/June correction is unlikely, since valuations and positioning have largely adjusted. In the eurozone, the European Central Bank delivered a surprise rate cut, signaling both a clear divergence from Fed action and continued policy support. The emerging gap between the two central banks should underpin a stronger U.S. dollar.

Equities continue to run higher, as volatility across all asset classes has fallen to pre-crisis levels. Despite rising concerns over market bubbles, equity valuations remain close to long-term averages and equities appear inexpensive relative to fixed income. Accommodative central bank policies can probably support near-term prices, but sustained appreciation will likely require stronger economic growth to subsequently boost corporate earnings. We do expect growth to materialize, and future returns will likely be positive yet muted, as well as more dependent on stock selection.

The information contained in this article does not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

 

 The Jacksonville Business Journal has ranked D2 Capital Management in the top 25 of Certified Financial Planners in Jacksonville.  The Firm is also a member of the Financial Planning Association of Northeast Florida, the Jacksonville Chamber of Commerce, the Southside Businessmen's Club, and the Beaches Business Association.

December Taper or Not

By:  Russ Koesterich, CFA, Chief Investment Strategist for BlackRock and iShares Chief Global Investment Strategist.

As the Federal Reserve (Fed)’s December policy meeting approaches, many market watchers are obsessed with when the Fed will announce that it’s starting to scale back, or “taper,” its asset purchase program.

However, those who expect the start of tapering to mean the end of easy money, and possibly of related market gains, are missing an important nuance. While the Fed may start to taper as early as next month, the central bank will most likely maintain easy money policy by other means.

There are two reasons why monetary policy is likely to remain accommodative for an extended period of time.

• A fragile labor market. While the unemployment rate has dropped in recent years and initial unemployment claims are falling, other labor market metrics look less healthy. First, part of the drop in the unemployment rate can be largely attributed to falling labor force participation. Second, many of the new jobs being created are part time, leaving the underemployment rate high. Finally, despite some acceleration in job creation, wage growth remains well below trend.

• Low inflation. Given the still sluggish nature of the recovery, it should come as no surprise that inflation remains muted. Last week provided further evidence of the disinflationary trend, with U.S. consumer and producer price inflation decelerating to 1% and 0.3% respectively.

With growth uneven, the labor market fragile and inflation low, the Fed has significant latitude in how it adjusts monetary policy.  In fact, even while tapering, it can maintain accommodative monetary policy via other methods, such as through forward guidance on the path of short-term rates and potentially cutting the interest paid to banks on their excess reserves.

So what does this mean for investors? I continue to expect that short-term rates will remain low for a long time. Low rates, in turn, should help maintain high corporate margins, supporting the long-term case for stocks.

The information contained in this article does not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

 

 The Jacksonville Business Journal has ranked D2 Capital Management in the top 25 of Certified Financial Planners in Jacksonville.  The Firm is also a member of the Financial Planning Association of Northeast Florida, the Jacksonville Chamber of Commerce, the Southside Businessmen's Club, and the Beaches Business Association.

Iran deal unlikely to help much at the gas pump

The accord struck between Iran and a group of Western allies may do little for the U.S. consumer, with analysts predicting the deal will not do much, if anything at all, to push down retail gasoline prices.

Years of crippling sanctions have slashed Tehran's oil exports, which has in turn crimped the global supply of crude, helping to keep oil prices elevated. On Monday, Brent crude, the international benchmark, swooned by nearly $2 on news of a deal with Iran.

Geopolitical strife tends to boost international crude in a way that eventually trickles down into the cost of gasoline and other distillates, but consumers shouldn't expect the same dynamic in reverse. That's because demand for gasoline is still seen as flat in the uncertain global economic environment, which energy observers say is a key factor behind why gas prices have fallen by nearly 40 cents over the past two months, to about $3.22.

"The Iran effect on gasoline is very neutral," said Richard Hastings, global macro strategist at Global Hunter Securities. "Prices have drifted back up recently because of refinery outages," he said. "The role of Iran's crude is difficult to determine in an environment of slack demand."

In a research note Sunday night, Goldman Sachs noted that the weekend's six-month agreement is still less than comprehensive. The provisions may provide modest relief for Iran's beleaguered economy, but the large majority of sanctions— including those on Tehran's crude exports—will remain unchanged. According to data from the U.S. Energy Information Administration, Iran's exports have crashed from a 2005 peak above 2.6 million barrels per day, at the time its highest in at least 25 years, to just over 1 million this year.

Meanwhile, global demand for oil is expected to remain tepid at best. The EIA expects gasoline prices to fluctuate between $3 and $3.50 next year, off their 2011 peak near $4 per gallon. Earlier this year, the EIA sliced its projections for gasoline demand to their lowest level in 12 years, underscoring how consumers are still struggling in a tepid recovery.

Record amounts of crude are being produced by the world's largest economy—helping at the margins to slake the country's voracious demand for energy. Meanwhile, cheaper and more efficient energy sources are also curbing gasoline demand in ways more consequential than potential Iran supply, said Global Hunter's Hastings.

Source:  Javier E. David, CNBC

The information contained in this article does not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

 

 The Jacksonville Business Journal has ranked D2 Capital Management in the top 25 of Certified Financial Planners in Jacksonville.  The Firm is also a member of the Financial Planning Association of Northeast Florida, the Jacksonville Chamber of Commerce, the Southside Businessmen's Club, and the Beaches Business Association.

Why a Saturday mindset is bad for retirees

Your working life is like a long string of weekdays; your retirement is like a long string of weekends. And that’s a major reason why so many savers underestimate how much they’ll actually spend when they retire.

This metaphorically persuasive (if unscientific) explanation appeared this week in a piece by Corrie Driebusch in The Wall Street Journal in which financial pros discussed how they grapple with their clients’ sometimes unrealistic expectations. Driebusch describes her conversation with Jonathan Murray, a financial adviser with UBS Wealth Management Americas in suburban Baltimore, Md.:

“Many soon-to-be retirees assume that because they’re no longer commuting and purchasing clothes to wear at the office, they will spend less. But this is often not the case…To drive this point home, [Murray will] ask clients on what day of the week they spend the most money. The answer, he says, is nearly always the same: Saturday. In retirement, he tells clients, every day can be a Saturday.”

It makes sense on one level. Sure, during your working life, Saturday is the day you spend big on essentials like the weekly groceries and getting the lawnmower repaired, but it’s also the day you and the spouse might treat yourselves to a ballgame or a big night out. And as Encore contributor Glenn Ruffenach noted in a recent post, that kind of spending can add up quickly for retirees, even if they aren’t attacking the high-priced items on their bucket list.

The bottom line: What you’ll spend in retirement is a tough-to-predict figure, and you’ll need to consider it in detail—and probably, more than once—as retirement draws nearer.

Source:  Matthew Heimer, Market Watch

The information contained in this article does not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

 

 The Jacksonville Business Journal has ranked D2 Capital Management in the top 25 of Certified Financial Planners in Jacksonville.  The Firm is also a member of the Financial Planning Association of Northeast Florida, the Jacksonville Chamber of Commerce, the Southside Businessmen's Club, and the Beaches Business Association.

Stocks Consistently Outperforming Bonds

The chart above is from Bespoke Investment Group and shows the relative strength of the S&P 500 versus long term US Treasuries over the last year.  When the line is rising it indicates that stocks are outperforming bonds and vice versa when the line is falling.  Also, when the line is in the green zone it indicates that equities have outperformed Treasuries since the start date.  Conversely, when the line is in the red zone, it indicates that Treasuries are outperforming the S&P 500 since the start date.

Given the strength in equities this year, it isn't a surprise that stocks are outperforming long term Treasuries.  What is notable, however, is the consistency with which they have been outperforming.  As shown in the chart, if you purchased an equal amount of equities and Treasuries one year ago, there has not been a single day since then where the cumulative return on equities was less than what you would have gotten from Treasuries.  How's that for consistency!

Source:  Bespoke Investment Group

The information contained in this article does not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

 

 The Jacksonville Business Journal has ranked D2 Capital Management in the top 25 of Certified Financial Planners in Jacksonville.  The Firm is also a member of the Financial Planning Association of Northeast Florida, the Jacksonville Chamber of Commerce, the Southside Businessmen's Club, and the Beaches Business Association.

Half of Near-Retirees With 401(k)s Don’t Have an Advisor

A new study by the Spectrem Group’s Millionaire Corner found that half of 401(k) plan participants between 50 and 64 aren’t using a financial advisor as they prepare for retirement. Among those who do, just 40% say they rely on their advisor’s guidance for the majority of their financial needs.

The report, “Advisor Usage Among Defined Contribution Plan Participants,” found a third of respondents were referred to their advisor by a friend or family member. Referrals from people they knew were far and away the most popular way investors learned about an advisor.

Just 9% of respondents said they found their advisor on a website, and 7% said they were introduced at a seminar or special event. Only 6% said they were contacted by an advisor first.

While both men and women were more likely to rely on a referral, men were more likely than women to say they found their advisor online. Thirteen percent of men went online to find an advisor, compared with 5% of women. Nearly half of women said they chose their advisor based on a referral, compared with 27% of men.

“Despite research showing that the majority of Americans are insufficiently prepared for retirement in terms of their savings and investments, the majority of defined contribution plan participants continue to view their 401(k) accounts as a savings plan,” George Walper, president of Spectrem Group, said in a statement. “Nearly all, however, could benefit from having access to regular financial advice on how to make the most of their portfolio.”

Retirement plan participants are generally satisfied with their advisors’ services, according to the report. Although only half of respondents are using an advisor, two-thirds of those said they were satisfied with their services. Seventy percent said they liked how responsive their advisor was to their requests.

Almost 60% of plan participants have a written plan from their advisor, and 96% of them say they’re at least somewhat satisfied. Fifty-two percent said they were very satisfied.

Among participants with the highest account balances, those with at least $100,000, 27% say they have a financial plan and 35% say they will have one soon.

Source:  Danielle Andrus, ThinkAdvisor

The information contained in this article does not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

 

 The Jacksonville Business Journal has ranked D2 Capital Management in the top 25 of Certified Financial Planners in Jacksonville.  The Firm is also a member of the Financial Planning Association of Northeast Florida, the Jacksonville Chamber of Commerce, the Southside Businessmen's Club, and the Beaches Business Association.

The outlook for the stock market

"...The outlook for the stock market continues to be favorable. The risk of a recession is low, monetary policy is very expansive, market valuations are fair to full though not extreme, and investors are optimistic but not euphoric. The market may be more volatile in the near term, however, as consensus economic and earnings expectations remain too high. While the Federal Reserve’s bond buying program should continue to support the stock market, this added liquidity, as noted above, has both reduced investors’ sensitivity to risk and significantly helped boost bond and stock prices. Consequently, the Fed’s stated intention of eventually winding down that program coupled with the uncertainty as to how and when it will do so could also contribute to increased market volatility..." 

Source:  Ronald Canakaris, Chairman & Chief Investment Officer at Aston Asset Management.  He manages the Aston/Montag & Caldwell Growth Fund which is part of D2 Capital Management equity portolios.

The information contained in this article does not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

 

 The Jacksonville Business Journal has ranked D2 Capital Management in the top 25 of Certified Financial Planners in Jacksonville.  The Firm is also a member of the Financial Planning Association of Northeast Florida, the Jacksonville Chamber of Commerce, the Southside Businessmen's Club, and the Beaches Business Association.

What Happens To Stocks When Interest Rates Go Up?

One of the greatest fears today is the coming rise in interest rates. The concern is that when rates rise, not only will bond prices fall, but rising rates will also undermine equities, driving stock prices down.

All other things held constant, an increase in interest rates should reduce stock prices. This occurs because the present discounted value of future dividends falls in direct conjunction with rising interest rates. But of course, all other things are never held constant. As a general rule, when interest rates are rising most rapidly during an economic expansion, this also corresponds with significant economic growth and increasing corporate profits and generally occurs in the middle of economic expansion phases (as opposed to at their end). Thus, although stock prices are hurt by the higher interest rates through the adverse discounting process, the favorable economic growth and increased per share earnings have, on average, more than offset this negative effect.

Source:  Rob Brown, FinancialAdvisor.com

The information contained in this article does not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

 

 The Jacksonville Business Journal has ranked D2 Capital Management in the top 25 of Certified Financial Planners in Jacksonville.  The Firm is also a member of the Financial Planning Association of Northeast Florida, the Jacksonville Chamber of Commerce, the Southside Businessmen's Club, and the Beaches Business Association.