FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors.
Vanguard Warns Against Ditching The 60/40 Portfolio (Investment News)
Fran Kinniry, principal at Vanguard’s investment strategy group says that investors and advisors shouldn’t kiss away the classic balanced portfolio that calls for 60 per cent stocks and 40 per cent bonds just yet.
Kinniry says in the next decade this strategy could return less than half its historical average of about eight or nine per cent but that it could be the best option for managing risk. This he says is because investment grade bonds are the best hedge against a decline in equities.
Doug Kass of Seabreeze Partners just published his ’15 Surprises For 2013′. In it he writes that bullish consensus expects the S&P 500 to close between 1,550 – 1,615 this year and for the 10-year U.S. note to trade at 2.50 per cent.
He thinks this is too optimistic on stocks and too negative on bond prices. “I believe that the U.S. stock market will make its 2013 high in the first two weeks of January, be in a yearlong range of 1275-1480 and close the year at 1425 and that the 10-year U.S. note will be below 2.00% in the first six months of 2013”.
CFA Institute Launches New Program For Those Outside The Front Office (The Wall Street Journal)
The CFA Institute has launched the Claritas Investment Certificate and is broadening its scope in the financial services industry. The latest program offers a test for those that work alongside money managers but outside of the investment business in areas like human resources, sales, marketing etc.
The first exams in the pilot program are set to take place in March and global registration for it begins in May.
The Fear Index Is Near A Six-Year Low (Bespoke Investment Group)
The VIX — also referred to as the fear index — is at a six-year low according to Bespoke Investment Group. It surged right before the fiscal cliff and tumbled after.
“If there’s a line in the sand for the VIX, it looks to be right around 10. …While the VIX has dipped below 10 briefly in the past, it hasn’t stayed there for long.”
10 Mistakes That Can Turn Investors Into Their Own Worst Enemy (Business Insider)
After the financial recession, the SEC commissioned the Library of Congress to research “behavioural Patterns and Pitfalls of U.S. Investors,” which revealed that some human behaviours and emotions hurt individual investors.
Some of these mistakes include selling winners and sticking with losers, which researchers call the ‘Disposition Effect.’ Listening to the media for tips is another.
The 10 Best Investments In A Year Of Easy Monetary Policy (Morgan Stanley Smith Barney)
Morgan Stanley Smith Barney is out with its 10 best investment ideas for 2013. Their ideas are based on three trends 1) exceptionally lower interest rates 2) emerging markets driving global growth 3) continued monetary easing.
Their investment ideas include water, emerging market equities, high quality municipal bonds, and commodities and gold.