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Articles by Anna Sachar
Political Noise, Market Poise
Global political developments continued to capture headlines.From rising optimism about the passage of a tax bill in the U.S. to German Chancellor Angela Merkel’s challenges in forming a coalition government, to turmoil in the Middle East, headlines over the month once more focused on geopolitical events. Economic activity remained steady as data pointed toward an uptick in momentum. Growth and labor market data released in November suggested solid momentum in the U.S. economy.
Weekly Market Summary
Summary: SPX, NYSE and DJIA made new all-time highs this week. This augurs well for the months ahead. The leader, NDX, has fallen into a trading zone; a return to this week's low likely triggers a small correction to price levels from late October. SPX would follow. The big event this week is the FOMC meeting on Wednesday, during which a decision to raise the Fed Fund Rate is expected. This would be just the 4th rate increase this economic cycle.
Why being authentic is best for connecting with clients
Living near food-obsessed Philadelphia makes it easy to find great places to eat. There are hidden gems and longstanding institutions for every craving imaginable. People’s tastes vary, but I’ve found that, as with a financial advisor, people value authenticity above all else. Diners and investors both appreciate establishments that are up-front about who they are and what they do. A rustic eatery or burger bar can be just as beloved as haute cuisine.
Computer Tutor - Raymond James - Commentaries - Advisor Perspectives
When we first put the computer on the air, we asked it what it wanted to buy and we couldn’t wait to see what it reached for. It said, “Treasury bills and cash.” We couldn’t get it to buy anything. So we checked out the program again, and while we were checking out the program, the markets went down. Then we asked it again. The computer insisted on staying in cash. The market went down some more. We begged it to buy something. “There must be ONE stock somewhere that’s a buy,” we said.
The Best Strategy for Retiring Without Adequate Savings
Most research on retirement strategies assumes that people have saved adequately. But data on household savings shows that many households fall short, and will need to call on relatives or other sources for support. This raises questions about the best withdrawal or annuity strategies when savings are insufficient. It turns out that which strategy works best is different than for adequately funded retirements.
Why Target-Date Funds are Out of Date
Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives. The following are some commonly asked questions and concerns I’ve heard from advisors about 401Ks, target-date funds and retirement. A little bit of both. They are easy for investors and reduce the burden for plan sponsors. For money managers, it increases participation and assets go up. But, there have been problems when performance has disappointed. 2.
The Unambiguous Tax Deferred Retirement Account
Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives. This article is in response to Kerry Pechter’s article, The Ambiguity of Tax Deferral, which appeared on December 4, 2017 and the SSRN paper it referenced. In contrast to the idea that there are different, but valid, ways to look at traditional tax-deferred 401(k) and IRA accounts, I show that there are right and wrong conceptual models.
The Fallacy of Weak Productivity
Models of the economy are pretty useful tools. And simple models are some of the most useful. They help people envision how the world works. They help organize thinking. For example, the model that says potential U.S. economic growth is determined by "population (labor force) growth" plus "productivity" is an elegant model that shows how adding workers, or having them become more productive, leads to more economic growth.
A Municipal Official Statement Reader’s Abbreviated Checklist Manifesto
If you can’t determine the purpose of the financing after a quick look at the cover or in the body of the OS, you may want to look at other bonds. Once you understand the purpose of the financing, you should ask yourself if it makes sense. Is the project essential infrastructure? Does it meet an obvious public need in the community where it is being developed? You should be able to answer these quickly.
Advisor 'Gamma' - Investius News - Videos - Advisor Perspectives
New research shows financial advisor “gamma” may help improve portfolio returns, says Paul Ellenbogen of Morningstar.
On My Radar: The Liscio Report
I met Philippa Dunne, co-editor of The Liscio Report, at the Camp Kotok fishing trip last August. She dials into state tax receipts and has many deep contacts. What I like is how she tracks the data on the lookout for recession risks. I found the most recent report excellent. The Liscio Report (link below) is their institutional report. I asked Philippa if I could share it with you and, if you are interested in her research service, if she could provide you with a discount.
Populist Plutocracy and the Future of America
In the first year of his presidency, Donald Trump has consistently sold out the blue-collar, socially conservative whites who brought him to power, while pursuing policies to enrich his fellow plutocrats. Sooner or later, Trump's core supporters will wake up to this fact, so it is worth asking how far he might go to keep them on his side.
Five Lessons for Advisors from ISIS and Al-Qaeda
Even the most evil organizations have good practices that are worth emulating, according to former-CIA Director John Brennan. Advisors can learn from Osama Bin-Laden and groups including ISIS and Al-Qaeda, which have proven to be surprisingly resilient and fast-growing. Having served under six presidents throughout a distinguished career spanning over three decades, Brennan rose to be the director of the CIA under President Obama.
Five Lessons the CIA Learned from ISIS and Al-Qaeda
[Editor's note: This article went to press before this morning's tragic event in New York City. John Brennan was very clear about the utterly evil nature of the organizations that he studied, but I understand that even the notion that you can learn from something that evil is disturbing.
Automatic Job Storm Coming
The jobs report for November was solid, with job growth above the recent average. But earnings were a disappointment, as we will see. Philippa Dunne’s summed up the report in a recent commentary: Employers added 228,000 jobs in November, 221,000 of them in the private sector. Both are nicely above their averages over the last six months, 164,000 headline and 162,000 private. Almost all the major sectors and subsectors were positive.
Why Is Inflation below Target in So Many Advanced Economies?
Since the global financial crisis, inflation in the advanced economies has persistently undershot their 2% targets despite unprecedented quantitative easing (QE), extraordinarily low interest rates, large fiscal deficits and near all-time low unemployment. US Federal Reserve (Fed) officials have explained that the weakness of inflation in 2017 is due to the reduction in the price of mobile-phone data charges.
China Clears Way for More Foreign Participation
At this time of the year, smog in Beijing, China, can be overwhelming. Throughout the city this fog/smog prevents the sun from shining through. But, the pollution problems have not clouded financial activity. Encouragingly, we continue to see a further opening up of capital markets in China in addition to more regulatory surveillance. While the smoggy air deters me from walking the streets outside, the city’s indoor malls are extensive.
Why Macron’s Reform Agenda Is Boosting Business Optimism
Market observers have long blamed France’s labor code and other policies for the country’s slow growth and high unemployment. Yet, Katrina Dudley, portfolio manager, Franklin Mutual European Fund, sees a renewed sense of business optimism in France under President Emmanuel Macron. She also thinks Macron’s eurozone proposals could make an attractive long-term investment case for select European equities.
What’s the EM Story? It’s All About Growth
We’ve had, finally, after many years, an acceleration in earnings growth, far faster than the kind of growth we’ve seen in developed markets, and that’s expected to continue into 2018; and I think that’s going to be an important underpinning of strong returns for emerging-market investors. But I think there’s more, which is that emerging-market equities are now still quite cheap whereas developed-market stocks are trading at relatively high valuations, and I think that difference could narrow.
Housing and Manufacturing Growth At Multi-Year Highs
Summary: Waterfall events like the current one tend to most often reverberate into the weeks ahead. Indices will often jump 10% or more higher and also attempt to retest the lows. Volatility will likely remain elevated for several months. But the fall in equity prices, which has knocked investor sentiment to its knees, opens up an attractive risk/reward opportunity for investors. Further weakness, which is quite possible, is an opportunity to accumulate with an eye toward year-end.
The Five Ws of Style Factors
To explain the intuition and use for five style factors, we tell the story with the five Ws (and one H): who, what, when, where, why and how. I was a professor for 15 years, and ended my time in academia as Chair of the Finance and Economics Division at Columbia Business School. During my time as an academic, I wrote close to a hundred scientific papers — with technical details that most people would find impenetrable.
Fake Tax Reform - Euro Pacific Capital - Commentaries - Advisor Perspectives
After supposedly chomping on the bit for years to pass meaningful tax reform, Republicans are now set to blow an historic opportunity. Whatever version of the Bill that emerges from the House and Senate Conference Committee (which will be signed by President Trump faster than he can down a Filet o’Fish), will be far less than the Republicans envisioned when they finally captured the White House and both Congressional Chambers in 2016.
The Hidden Cost of the FIFO Rule; How Long will Growth beat Value?
With changes coming to the tax code, we look at its impact on investors and how long growth stocks will continue to outperform their value counterparts. As Congress works to overhaul the current tax code, the change to a “first in first out” (FIFO) mandate has strong implications for retail investors.
What the New Tax Plan Means for Dividend Investors
As tax-reform proposals are analyzed and debated, we look at the differences between the House and Senate plans for income-oriented investors. Also, we look at the implications of GE’s dividend cut. With all eyes on proposed tax reform, there are major differences for master limited partnerships (MLPs) between the House and Senate plans.
How Much Longer Will Growth Outperform Value?
With growth-oriented investing continuing to outperform a value-based approach, we look at whether this trend will continue and what might tilt the balance. David Einhorn: Value Investing May Be Dead and Amazon and Tesla Killed It (CNBC, October 24) In a letter to investors, hedge fund manager David Einhorn looks at the future of value investing and how it can compete with growth stocks.
Why Top Strategists Favor Stocks over Bonds for Income
Many top strategists, including Rick Reider of BlackRock, favor stocks over bonds. We look at those analyses plus other news about income investing. BlackRock’s Top Bond Strategist is Actually a Bing Believer In Stocks (CNBC, October 25) Rick Reider, who runs fixed income investing for BlackRock, talks about why he currently favors stocks rather than the fixed income market. “I think people look at equities wrong.
The Math on E&P Stocks Doesn’t Add Up
In my more than 20 years in the investment business, I have seen many companies and industries lose their focus and discipline for a variety of reasons. Today, the exploration and production (E&P) sector fits squarely into that category.
Why Market Valuations are Not Justified by Low Interest Rates
Note: This is an extended commentary, detailing what I believe are critical considerations for investors here. You’re probably going to need a cup of coffee, a snack, a calculator, and possibly a nap along the way. There's a lot here, and reading it more than once may be useful.
On My Radar: The Great Central Bank Unwind
“We think the main attribute of the next crisis will be severe liquidity disruptions resulting from market developments since the last crisis.” – Marko Kolanovic, Ph.D., Head of Quantitative and Derivatives Strategy, JP Morgan Chase & Co. (Source:The Telegraph) Yet this is not the mood in which bull markets typically end. Central banks around the world have purchased approximately $15 trillion of financial assets since the great crisis. Outside of the U.S., the BOJ and ECB are still buying.
Lessons Learned from the Global Financial Crisis
It’s been roughly 10 years since the 2007–2009 Global Financial Crisis began to unfold. It left lasting scars on the global economy and left many investors deeply wounded, too. Here, Tony Coffey, senior vice president and portfolio manager, Franklin Templeton Multi-Asset Solutions, explains why investors who sold everything in a panic probably bore the worst scars.
The 6 Most Expensive Stocks in the Dow Jones Industrial Average: Part 1 of 5
When the Dow Jones Industrial Average first hit 20,000 in January of this year it generated quite a buzz within the financial community. Since January the Dow Jones Index has continued to rise and currently is over 22,700. However, the Dow Jones is not the only market index that is currently sitting at or near all-time highs. The broader S&P 500 index is also at a historic peak.
Crypto-Fool’s Gold?
The price of Bitcoin is up 600% over the past 12 months, and 1,600% in the past 24 months. But the long history of currency tells us that what the private sector innovates, the state eventually regulates and appropriates – and there is no reason to expect virtual currency to avoid a similar fate. CAMBRIDGE – Is the cryptocurrency Bitcoin the biggest bubble in the world today, or a great investment bet on the cutting edge of new-age financial technology?
In and Out: Dan Solin's Investing Secrets
Markets go up and down. It would be great if someone could tell you when to get in and when to get out. Some market experts claim the ability to predict the direction of the market. Don't believe them! They would have to know tomorrow's news because that's what drives the market. No one has that ability. Subscribe to "Dan Solin's Investing Secrets" YouTube channel and get a free copy of Dan's book "The Smartest Sales Book You'll Ever Read." https://goo.gl/x3swRG
Discounts - Investius News - Videos - Advisor Perspectives
Closed-end fund discounts have narrowed, but opportunities may remain in certain areas of the market, CEF industry pros say.
What Income Inequality Means for Economic Growth
Nearly a decade after the onset of the global financial crisis, real economic growth remains constrained by high levels of household debt, particularly for those at the lower end of the income and wealth distributions. The build-up of indebtedness in these households prior to the onset of the crisis continues to cast a shadow over the real economy.
A Song of Ice and Fire: Portfolio Hedging Edition
A downturn for stocks may not be top of mind these days, but one will happen eventually. To prepare for that, Russ discusses why the source of the selloff matters as much as the magnitude. With the S&P 500 at another new high and volatility beaten into a state of permanent submission, it seems churlish to discuss preparing for a downturn using hedges and downside protection. That said, while the market rally can continue, it is worth pausing to contemplate how surreal things are getting.
This Rocky Stock Market Requires an All-terrain Portfolio
Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives. The bulk of U.S. stock gains in this long-running bull market are due to one variable: the expansion of the price-to-earnings ratio. Earnings for S&P 500 companies have stagnated since 2014. Stock prices have gone up because the Federal Reserve and other central banks have squeezed all investors to the same side of the risk curve.
Why cost matters in the active vs. passive debate
What a difference a few decades can make. When Vanguard launched the first index mutual fund for retail investors in 1976, we were ridiculed. Industry “experts” mocked the idea that investors would ever settle for performance that matches the performance of the market. Fast-forward 20 years. In the mid ’90s, I can remember working in institutional sales for Vanguard. It was the early days of the tech boom, and it was my job to sell our investments and retirement services to Fortune 500 companies.
How to Market to Millennials
Do you think you’re wasting your time pursuing Millennials as clients because they don’t have enough money? If so, you’re wrong, according to Curt Steinhorst. He says Millennials are saving – and spending – a lot more than people think. They want to work with advisors, Steinhorst said, but you need to adopt a radically different approach than with other generations.
Global Income, Technology and Other Opportunities for Capital Growth Investors
Here are the key takeaways from events and interviews for capital-growth investors during the past month. Focusing on strong companies with a competitive advantage offer opportunities, but it comes at a price.
The 19th Party Congress
On October 18th, the Communist Party of China (CPC) will meet for the 19th Party Congress. China’s leadership for the next five years will be determined at this meeting. In this report, we will offer a background on China’s government, focusing on the difference between de jure (what is the official structure of China’s governance) and de facto (how it really works).
Investment Outlook
Long Road to Travel before Reaching “Tighter” G-3 Monetary Policy The global economy’s post-crisis economic recovery is a little over eight years old. And now, after years of monetary stimulus, the US, Europe and Japan are seeing firmer growth and inflation data, but inflation data continues to indicate price growth beneath each central bank’s target—including the Federal Reserve’s (Fed’s).
Market Thoughts for October 2017
Brad McMillan, Commonwealth’s CIO, reports on a great month for the financial markets. In September, all three U.S. indices and developed markets around the world were up. These results are surprising given recent events. The U.S. was hit by some of the worst storms in history. Plus, the North Korea crisis persists, with credible talk of a nuclear war. Still, the markets continue to respond to the fundamentals, like strong consumer confidence and business investment.
Trump’s Tax Cuts and Their Effect on Dividend Strategies
Changes to the tax code and the Fed’s impact on interest rates are some of the topics we explore for income-oriented investors. Why American Workers Pay Twice as Much in Taxes as Wealthy Investors (Bloomberg, September 12) The author looks at the tax code and how some of the proposed changes by the Trump administration will impact investment income.
How to Convert the Alpha Male Prospect
Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives. We’ve all had experience with the alpha male prospect. He is supremely self-assured. His confidence is not confined to his area of core competence. Even if his business success and educational background are unrelated to investing, he believes he knows more than you about how to invest and plan for his future.
Do Nothing: Dan Solin's Investing Secrets
Don't confuse activity with progress. In investing, doing nothing is a virtue. The securities industry profits from activity. It's good for them but bad for you because it increases costs. Once you've selected your investments, do nothing. Ignore the financial news. Stay the course. Don't get distracted. Good investing is about as exciting as watching paint dry.
Rising Rates: What All Muni Investors Should Know
What shouldn’t you do as the Federal Reserve tightens policy? You shouldn’t be passive. Passive muni investors suffer from the painful phenomenon of clipped wings. That’s when passive strategies can’t rapidly reinvest in higher-yielding securities as rates climb, unlike their more nimble, actively investing cousins. We’ve shown the vicious effects of passive investment on investor returns. And now we know when passive investing hurts most: Always.
World Markets Update
All eight indexes on our world watch list have posted gains for 2017 through August 14. The top performer thus far is Hong Kong's Hang Seng with a gain of 23.86%, followed closely by India's BSE SENSEX at 18.11%. In third is our own S&P 500 with 10.14%. The tables below provide a concise overview of performance comparisons over the last four weeks for these eight major indexes.
Five Trends That Could Impact Global Small Caps
The only constant is change — and the global market is certainly proof of that. As we assess our outlook for the rest of the year, we see several potential changes that could impact international small- and all-cap funds. Here are the five trends we anticipate having the biggest effect — and the ways the Invesco International and Global Growth team is poised to respond. 1.
Retirement Risk - Investius News - Videos - Advisor Perspectives
When planning for retirement income, it helps to understand the various risks you may encounter, says Christine Russell, TD Ameritrade.
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