FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors.
Four Ways To Avoid Financial Minefields In Your Youth (WealthManagement.com)
We all do things in our youth that we wish we could do differently, especially when it comes to our finances. Chris Taylor at WealthManagement.com points out how young people can avoid “financial minefields.”
1. Don’t try and pick individual stocks, make low-cost index funds and ETFs the core of your portfolio. 2. Spend on things that can help further your career like a new computer language or a degree that would make sense in your field. 3. “When crunching housing costs, don’t use the wrong maths.” Remember to factor in repair costs, fees, taxes, commission you’d have to pay an agent when you sell. 4. Set up a certain amount that is directly deposited in your savings account and don’t give yourself a choice.
Investors Should Stop Ignoring Emerging Market Value Stocks (AllianceBernstein Blog)
As developed markets rebounded in the past year and a half, emerging markets have been slower to respond to improving activity in developed markets. “Nervous EM investors have been slow to abandon the relative safety of predictable, fundamentally stable stocks, while shunning riskier stocks — regardless of valuation,” writes Henry S. D’Auria of AllianceBernstein.
“This indifference to value seems pretty risky to us, and carries considerable opportunity costs, especially if developing economies gain a firmer footing next year as we expect. Why? Because, after prolonged underperformance, long-neglected high-beta, cyclically sensitive stocks now dominate the value realm, making it far more sensitive than usual to broad EM economic trends, which themselves are more sensitive to broad global economic developments.”
An Edward Jones survey has found that both clients and firms would stand to benefit from minority advisors. 79% of the African-American and Hispanic respondents said it would be in the best interest of the firm. While 76% said it would also be in the best interest of the client to have more diversity. “Diversity is not just the right thing to do, it’s a business imperative,” Jesse Abercrombie, an Edward Jones financial advisor said. “We have always supported diversity, but we are now increasing recruiting and marketing efforts to hire more diverse advisors to better reflect our growing client base.”
Individual Investor Stock Allocation Hits Its Highest Level Since The Crisis (Pragmatic Capitalism)
The latest American Association of Individual Investors (AAII) survey showed that demand for stocks had hit a new high, with a 68% allocation, up from 64% in November. The 68% level is the highest since July 2007, right before the S&P 500 peaked. Meanwhile, demand for cash and bonds were at new lows, with bond holdings down to 15% and cash holdings down to 16.5%.
Well Fargo’s Gina Martin Adams was the most bearish strategist on Wall Street last year, with a 1440 year-end S&P 500 target. The index closed at 1848. Now, even as other strategists are raising their targets, she has a 2014 S&P 500 year-end target of 1850, the lowest on Wall Street. Adams says she “wouldn’t be surprised to see the index trade as high as 2,100 and as low as 1,500 at some stage throughout the year.” She also thinks 2014 will “be filled with both thrills and chills for equity investors, offering both bulls and bears something to feast on.”
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