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The Data Doesn’t Support Correction Talk And Investors Waiting To Buy The Dip Will Be Disappointed (BMO Capital Markets)
Following the run up in stocks this year many are talking about a stock market correction. But Brian Belski and BMO Capital Markets this isn’t likely. “We believe performance patterns alone are not enough to justify directional market calls,” he writes. Almost all bull market corrections are triggered by a Fed rate hike or a spike in oil prices, and both of these conditions are “nonexistent in the current environment.”
“Instead, investors should consider the macro and fundamental backdrop along with risk-taking levels to determine whether or not the performance is justified. From our perspective, the data simply do not support the correction talk and we remain committed to our optimistic market outlook through year-end and into 2014. As such, we believe those investors waiting to “buy on the dip” are likely to be disappointed.”
Despite the recent worry about emerging markets, Rama Krishna of ARGA Investment Management who manages a portion of the Vanguard International Value Fund, thinks there is a new valuation opportunity there.
“As developed market economy has recovered, and equally, interest rates in the United States rose, the other investors who were focused in emerging markets suddenly became more aware of emerging market risks and decided to sell down or reduce their exposure in those markets,” Krishna told Vanguard.
“On the other hand, when they did that, very clearly, prices went down, even though the long-term earnings power of those businesses hadn’t really changed. That, in turn, created a new valuation opportunity for us. And as a result of which, we did research on those companies, and we increasingly and steadily increased exposure to both businesses, which we believe are extremely attractively valued.”
70% of registered independent advisors (RIAs) surveyed in Charles Schwab’s Independent Advisor Outlook Study, are “very optimistic” about growth opportunities, reports Anthony Volastro at CNBC. The survey polled 800 RIAs with a collective $US228.5 billion in assets under management. And advisors said competition would be driven by “regulatory changes and the new generation of clients who are likely to seek advice from multiple advisors, not just one,” writes Volastro.
The survey also found that 34% of advisors want to increase tech resources and 27% are willing to move to cloud. 55% of advisors also said to firms would have to offer low cost index funds.
63% of lesbian, gay, bisexual and transgender (LGBT) investors are bullish about the future of the U.S. economy in the medium-term, compared with 49% for straight investors, according to UBS. One of the reasons for this optimism is the Defence of Marriage Act ruling which the report states “has had a profound emotional and financial impact on their lives.”
It Doesn’t Matter When The Fed Tapers — QE Is Running Out Of Gas Anyway (Bridgewater Associates)
All the chatter on Wall Street focuses on when the Fed will begin to taper its $US85 billion monthly asset purchase program. But Ray Dalio’s Bridgewater Associates thinks what’s more important is that quantitative easing has stopped working.
“We think the question around the effectiveness of continued QE (and not the tapering, which gets all the headlines) is the big deal. Given the way the Fed has said it will act, any tapering will be in response to changes in US conditions, and any deterioration that occurs because of the Fed pulling back would just be met by a re-acceleration of that stimulation. So the degree and pace of tapering will for the most part be a reflection and not a driver of conditions, and won’t matter that much. What will matter much more is the efficacy of Fed stimulation going forward. In other words, we’re not worried about whether the Fed is going to hit or release the gas pedal, we’re worried about whether there’s much gas left in the tank and what will happen if there isn’t.”
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