FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors.
ROSENBERG: In A Market That Knows No Fear I’m Reminded Of Bob Farrell’s Investing Rules (Gluskin Sheff)
“In a market that knows no fear,” Gluskin Sheff’s David Rosenberg writes that he’s thinking of a few of former legendary Merrill Lynch strategist Bob Farrell’s rules of investing.
1. Rule #1, “markets tend to return to the mean over time.” The S&P 500 is already trading at 15.9x forward earnings, “above the cycle average of 14x and the mean for the past 10 years of around 15.” 2. Rule #4, “exponential rising or falling markets usually go further than you think, but they do not correct by going sideways.” The stock market is up 24% this year at a time when GDP growth forecasts have gone from 2% at the start of the year to 1.6%. 3. Rule #5, “the public buys most at the top and the least at the bottom.” 4. Rule #9, “when all the experts and forecasts agree, something else is going to happen.” 5. Rule #3 “fear and greed are stronger than long-term resolve.”
Traditional Advisory Firms Are Learning To Work With Online Advisory Sites (The Wall Street Journal)
Traditional financial advisers are beginning to work with online advisory sites reports Murray Coleman at The Wall Street Journal. Not only does this help them get more competitive, it also lets these advisory firms accept the business of smaller investors. “If you don’t take advantage of some of the more innovative advisory services online, you’re basically burying your head in the sand,” Ross Almlie, president of TCI Financial Advisors told the WSJ.
Advisors looking to jump ship favour LPL Financial and Raymond James according to Cogent’s Advisor Channel Migration Trends report cited by FA Mag. 49% of advisors would consider moving to LPL, while 44% would switch to Raymond James. UBS was the third favourite at 37%, followed by UBS and Commonwealth at 29% each.
The U.S. Is Now A Better Growth Story Than The Emerging Markets (Richard Bernstein Advisors)
“Our analyses through the years have clearly demonstrated that stock market performance is more closely tied to profits cycles than to economic cycles,” writes Rich Bernstein of Richard Bernstein Advisors. Markets are more concerned with corporate profits but emerging market investors are more focused on GDP growth.
55-60% of emerging market companies had negative earnings surprises in the past year, compared with 25-30% in the U.S. What’s more, “EM companies’ long-term growth projections are not superior.”
“US small cap companies offer superior growth to that offered by the emerging markets. The US is now a better growth story than are the emerging markets!”
SEC Bans Former Merrill Lynch Broker From Securities Industry (Investment News)
The SEC has banned James R. Lanier, a former Bank of America Merrill Lynch broker from the securities industry for stealing $US1 million from clients, reports Trevor Hunnicutt at Investment News. The SEC said Lanier forged client signatures and used the money to invest in a cellular telecommunications business and purchase things for himself.
“Lanier was convicted of wire fraud, mail fraud, money laundering, and aggravated identify theft. …He was sentenced to 106 months of incarceration and a five-year term of post-release supervision and ordered to pay $US887,931 in restitution.”
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