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Stock Valuations Are At Their Lowest Since 1980 (Bloomberg)
S&P 500 stocks are at their lowest valuation since 1980, according to Bloomberg. Individual investors added $20 billion to stock funds in 2013 but this only accounts for 3.5 per cent of the money pulled out since 2007. “The index trades at 15.4 times reported profit, below the average 19.9 reached in bull markets since 1962, according to data compiled by Bloomberg.”
PIMCO’s Mark Keisel Explains How To Find The Investment Sweet Spot (Advisor Perspectives)
“At PIMCO, portfolio managers and credit analysts are focused on finding the sweet spot – the most attractive bottom-up investments given today’s opportunities and risks that are also consistent with our top-down outlook.
“In our global credit portfolios, we continue to focus on regions and sectors that we feel can deliver strong growth and where bondholders may benefit from solid free cash flow to deleverage balance sheets. Regionally, our largest credit over-weights remain in the U.S. and in emerging markets given our more positive economic outlook in these areas. From a sector perspective, we favour industries and areas that have the ability to grow faster than the economies in which they operate. We remain positive on U.S. housing-related sectors, building materials, MLPs/pipelines, energy, gaming, Asia gas distribution and hospitals.”
The Shiller PE Ratio also known as the Cyclically Adjusted PE Ratio (CAPE) is at 22.6. A ratio of above 15 suggests that stocks are expensive, but this doesn’t mean there aren’t opportunities for investors.
“Equities have typically only suffered negative real returns over a given five-year period when the Shiller P/E at the beginning of the period was above 26x (and clearly good real returns when the Shiller P/E had fallen below 13x),” according to Credit Suisse’s Andrew Garthwaite. “In fact, when markets were trading on current Shiller P/Es in the past, the subsequent average annualized five-year real return was slightly below 5%, compared to a current real bond yield in the US of minus 0.5%.”
Photo: Credit Suisse
4 Banks Just Raised Their S&P 500 Targets (Business Insider)
Despite the uncertainty over Cyprus, everywhere you look, strategists are upwardly revising their S&P 500 targets.
Goldman Sachs is raising its target to 1625, from 1575. Deutsche Bank raised its target to 1625, from 1600. Credit Suisse raised its target to 1640 from 1550, and, Morgan Stanley raised its target to 1600, from 1634. The revisions were driven by improving economic outlook, loose global monetary policy, and better earnings.
Putnam Investments Launches Six New Funds (Investment News)
Putnam Investments, which manages $135 billion in assets, launched six new mutual funds today. 12 of 26 funds created since Robert Reynolds took over as CEO in 2008 are focused on alternative investments.
“Given all that investors and advisers have experienced over the past five years, and the multitude of directions that markets could travel over the next generation, we see a critical need for the investment industry to think anew about ways to capture opportunity and mitigate risk,” Reynolds told Investment News. This brings the total to 69 open-end mutual funds.
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