FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisers.
Europe And Japan Are Still Complete ‘Train Wrecks’ (Guggenheim Partners)
“Japan and Europe remain the train wrecks they were advertised to be. Interestingly, the slowdown in the eurozone is now concentrated at the core rather than on the periphery. As a result, we could soon witness a dramatic shift in the European political dynamic,” writes Scott Minerd.
Investors should keep this in mind when they’re considering the global economy. Even though quantitative easing has ended in the US, a larger, global monetary expansion is far from over, because other central banks will have to pick up the slack.
“The sell-off in US high-yield bonds and leveraged bank loans during the third quarter has made for an attractive entry point, and while I expect to see some sort of consolidation in US equities, the near-term risk is that stocks are headed higher,” adds Minerd.
Investors Want More Regulation So Badly They’re Willing To Pay For It (Investment News)
A new Finra survey suggests that investors want more regulation in the advisory industry so badly that they’re willing pay higher brokerage costs for it.
A whopping 92% of investors say it’s important to “have a cop on the beat” for protection, and 74% are pro “additional regulatory protections.” And on top of that, 56% of respondents want more regulation, even if increased regulation would result in higher fees.
Right now, Finra is debating whether to implement a customer-data-collection initiative — CARDS — and the deadline is Dec. 1. “The regulator argues that the system would let it collect reams of brokerage account information quickly and efficiently, bolstering its ability to detect investment product sales abuses and other harmful market trends,” reports Mark Schoeff Jr.
Pershing Isn’t Liable For Losses Resulting From Allen Stanford’s Ponzi Scheme (The Wall Street Journal)
A Finra arbitration panel has ruled that Pershing LLC isn’t liable for $US80 million in investor losses resulting from Allen Stanford’s $US7 billion Ponzi scheme, reports Matthias Rieker.
Stanford’s Ponzi scheme was one of the largest in US history; it collapsed in 2009, and with it went the retirement savings of more than 85 older investors. They sued Pershing, claiming it should have known that Stanford’s firm was a fraud, and that Pershing withheld information relevant to the fraud.
Dividends Help Clients Cope Materially And Psychologically When Things Get Rough (Financial Planning)
When the markets become volatile, advisers need to get clients to focus on the long-run benefits, rather than the ups-and-downs. One of the best ways to do that is to ask clients to look at dividends.
First, dividends help from the psychological point of view. “Because investors who hold dividend-paying equities can look forward to another payment within a few months, they should be more likely to maintain their positions,” writes Joseph Lisanti.
Additionally, reinvested dividends account for just over 40% of the market’s annualized total return starting in 1926 through June 2014.
Investors Need To Capitalise On Oil’s Decline (Charles Schwab)
The plunging oil prices have been the story for a while now, and it seems that oversupply and the dollar’s strength, rather than a weaker demand, are behind the drop.
“The rapid price drop in oil is likely to act as a boost to economic growth. With the amount spent on oil amounting to 4% of world GDP, the global price decline from around $US110 in recent years to $US80 is about a 27% decline, or more than 1% of world GDP,” write Liz Ann Sonders, Brad Sorensen, and Jeffrey Kleintop.
Although it doesn’t directly translate to a 1% boost in global growth, in the short term there may be some significant moves because consumers will definitely win out here. And investors should capitalise on that.
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