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Gluskin Sheff’s David Rosenberg argues that stagflation is the next major theme. He argues that this is because “you cannot keep real short-term rates negative for this long in the face of even modestly positive real economic growth without generating financial excesses today and inflation pressures in the future.”
“We started off the great secular bull market in bonds in 1981 with 15% inflation and 15% bond yields, and the mantra led by none other than Henry Kaufman who at the time at the time spearheaded Salomon Brothers’ Research Department, was calling for 30% inflation and long bond yields, and what he and the consensus back then underestimated was the resolve on the part of the Fed to slay the inflation dragon.”
“This might just be the cruelest time to be an asset allocator. Normally we find ourselves in situations in which at least something is cheap; for instance when large swathes of risk assets have been expensive, safe haven assets have generally been cheap, or at least reasonable (and vice versa),” according to James Montier part of GMO’s asset allocation team.
“However, today we see something very different. As Exhibit 2 shows, today’s opportunity set is characterised by almost everything being expensive.”
Some Financial Advisors Say Cold Calling Is Still Alive And Well (The Wall Street Journal)
While many in the financial advisor business have moved away from cold calling, some still argue that the practice helps their bottom line, according to the Wall Street Journal. Some do this the old school way by picking up the phone, other like Winnie Sun at Sun Group Wealth Partners begins by connecting on Linkedin. Others argue that the practice is good when you start your practice but becomes unnecessary as you establish yourself.
FINRA has barred John Thornes, president of California-based Thornes & Associates from the industry after allegations emerged that he stole $4.2 million from two clients, according to Investment News. One of the clients is said to suffer from Alzheimer’s. The self regulator also suspended his membership.
“Finra alleged that from December 2010 and January 2013, Mr. Thornes converted customer assets in two trust accounts, using at least 50 transactions falsely characterised as loans, and transferred the money to two of his friends,” according to Investment News. The case was settled last week.
Stocks keep hitting new all-time highs, and we’re hearing chatter that investors should enjoy this while it lasts. But S&P Capital IQ’s chief equity strategist Sam Stovall says this isn’t the case. He points out that “new highs are typical in a maturing bull market.” Each of the 11 bull markets since 1949 has lasted an average 57 months. 7% of all trading days within these bull markets set all-time closing highs.
We are 52 months into the current bull market. There have been 21 all-time highs since the first new all-time high in March, and that’s just 2% of all bull-market trading days. “So history would indicate, but not guarantee, that this bull market has many more new-highs to record before finally running out of steam.”
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