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Brian Belski: 3 Reasons Investors Should Pick Value Over Growth Strategies (BMO Capital Markets)
Many investors believe growth strategies, which consider the future growth of the company, are likely to do well. But Brian Belski at BMO Capital Markets thinks value strategies, which unlike growth strategies look at the current value of the company, will outperform. He points to 3 key reasons for this.
1. Improving earnings growth benefits value, not growth stocks – “Our work shows that value strategies work best during periods of recovering earnings growth, not the other way around. Indeed, overall earnings growth has rebounded sharply in recent quarters and longer-term projections remain at healthy and improving levels.”
2. Valuations are high and this benefits value investing – “When most stocks are more expensive investors should be seeking lower-cost alternatives. …Based on data since 1978, we found that value incrementally outperforms growth, on average, for up to a year following an above-average S&P 500 P/E level.”
3. Their market outlook supports value strategies – Belski has a 1,900 year-end target on the S&P 500. “Recent economic and earnings trends are putting upward pressure on our target models,” he writes. “In particular, both earnings and economic growth are expected to show incremental improvement throughout 2014. According to our work, this type of environment sets up very well for value investing.”
“We would urge investors to revisit value strategies not only because historical performance patterns favour them, but also because recent fundamental trends suggest that value is better positioned than growth,” he writes.
Why Baby Boomers Aren’t Prepared For Retirement (Business Insider)
John Stoltzfus, chief market strategist at Oppenheimer told Business Insider that the one thing no one talks about is that baby boomers are not ready for retirement. Stoltzfus gave Business Insider’s Steven Perlberg, 11 reasons that doesn’t think they’re prepared. We highlighted a few.
1. “The wholesale demise or dismantling of traditional defined benefit pension programs by corporations looking to cut expenses and liabilities that has occurred in the last 10 to 15 years.”
2. The underuse of 401(k) plans by participants and those who fail to enroll.
3. The tendency to ignore asset allocation and long-term planning when allocating money within 401(k) plans.
4. “Potential for increasingly later age requirements ahead to get full social security benefits as Washington lawmakers work to preserve the program for Boomers and generations that follow.”
5. Taking early distributions from 401(k)s for non-emergencies.
In order to work more efficiently advisors often automate workflow processes (i.e. use technology to help them with basic tasks) within their customer relationship management (CRM). But a study by SEI shows that 54% of advisors have not adopted workflow processes. 58% of advisors that have workflows in place said they rely on “memory, post-it notes, to-do lists, or travelling checklists to implement tasks.”
“Workflows not only provide a roadmap for how to deliver a consistent client experience, but the non-client facing activities can be orchestrated — from CRM through financial planning and proposal generation, all the way through the advisor’s custodial platform,” said Spenser Segal, CEO, ActiFi in a press release.
Cantor Fitzgerald Continues Its Hiring Spree (WealthManagement.com)
Cantor Fitzgerald has hired Jeff Schulte and Jim Hiles from Mariner Wealth Advisors, reports Diana Britton at WealthManagement.com. Cantor Fitzgerald has been on a hiring spree, and this was their fourth acquisition in the last five months. “What our focus was, and still is, is to provide that same high-quality touch, the same quality institutional-style services, but now to expand those services to private clients,” Stan Gregor, CEO of Cantor Fitzgerald Wealth Partners told Britton.
Corporate Insider Selling Is Cooling Off (Goldman Sachs)
Investors often watch for how insiders trade on a stock because employees are expected to have better information on their companies than outsiders. “Corporate insider activity is generally in line with historical averages,” noted Goldman Sachs’ David Kostin in a new note to clients. “Insider sales rose in late 2012 as S&P 500 reached its previous peak but has since receded. Purchase activity, while relatively minuscule in volume, is higher than at any point in the past decade outside of the financial crisis, suggesting managements and other corporate insiders expect further upside.” This pattern raises questions about the quality of information one can draw from watching such trades.
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