FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors.
How Investors Could Have Avoided The Drama In Dividend Paying Stocks (Charles Schwab)
After some good returns in early 2013, dividend paying stocks, often considered to be stable, took a hit in the second half of the year. After Ben Bernanke first spoke of the Fed taper last year, interest rates started to rise and this had “a significant impact on higher-yielding stock returns,” writes John Wightkin, director of equity research applications, Schwab Center for Financial Research.
There are several “adjustments to an equity income strategy,” that could help in such a scenario writes Wightkin. “Specifically, our research found that dividend-paying stocks with low payout ratios (dividends per share/ earnings per share), low price/earnings (P/E) ratios (market value per share/ earnings per share) or an A-rating by Schwab Equity Ratings would have generally had better total returns than dividend-paying stocks that don’t meet at least one of these criteria. Let’s look at why that might be and how you can find these types of stocks.”
30% of 302 advisors, surveyed by Market Strategies International for Janus Capital Group, said higher interest rates and their impact on investors’ portfolios is the most important topic they will discuss with their clients year. About 25% said portfolio rebalancing was the most important issue they would discuss with their clients. Finally another roughly 25% of those survey said the most important thing they discussed with clients this year would be income generating strategies.
10 Financial Advisory Blogs That You Need To Read (RIABiz.com)
If you’re like us, you are always looking for broader conversations on what’s going on in the financial advisory world. Lisa Shidler at RiaBiz.com has put together a list of the top 10 industry blogs. She also has a quick Q&A with the authors about the rationale at each.
Here they are: 1. Nerd’s Eye View by Michael Kitces; 2. The Reformed Broker by Josh Brown; 3. FPPad by Bill Winterberg; 4. Wired Advisor by Stephanie Sammons; 5. Scholarly Financial Planner by Ron A. Rhoades; 6. Abnormal Returns by Tadas Viskanta 7. Investment Writing by Susan Weiner 8. Wade Pfau’s Retirement Researcher Blog by Wade Pfau; 9. Rock the Boat Marketing by Pat Allen, 10. The Meridian Blog by Scott Dauenhauer.
‘Long Robots, Short Human Beings’ (Bank of America)
“The rise in the use of industrial robots and the decline in the number of manufacturing jobs for human beings (Chart 1, front page) remind us of the technology theme,” writes Bank of America’s Michael Hartnett in a note to clients. “BofAML’s tech analysts favour innovative hardware, the socially mobile consumer and cloud collaboration as their big 2014 themes. We are long tech but wary of the close correlation between internet stocks and central bank liquidity.”
Here’s All The Stuff That Could Ruin The World This Year (The World Economic Forum)
The World Economic Forum has identified 10 key risks for 2014. Here they are verbatim: 1. Fiscal crises in key economies; 2. Structurally high unemployment/underemployment; 3. Water crises; 4. Severe income disparity; 5. Failure of climate change mitigation and adaptation; 6. Greater incidence of extreme weather events like floods, storms, fires; 7. Global governance failure; 8. Food crises; 9. Failure of a major financial mechanism/institution; 10. Profound political and social instability.
Fiscal crises are expected to be the risk with the most impact this year. “Advanced economies remain in danger of fiscal crises. Given the US’s official public debt of more than 100% of its GDP, and Japan’s of more than 230%, investors may at some point conclude that these levels are unsustainable,” according to the report.
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