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Going into 2014, BlackRock's' Russ Koesterich writes that "from a broad perspective, many may feel a sense of déjàvu, since we expect most of the macro factors that existed in 2013 to persist: improving (but still relatively slow) economic growth, very low inflation and slowly rising interest rates." But he does see a modest pick up is US and global GDP growth lower energy prices
Based off that he has a few key investment themes: "We would advise investors to continue overweighting stocks in their portfolios. Equities may not be as inexpensive as they were a year ago, but they remain more attractive than bonds and cash. There are some important caveats to this view, however: We do expect more volatility in 2014 than we saw in 2013, and we think investors should be more selective. In particular, international stocks are worth investor attention, as they appear more reasonably priced than U.S. equities. We would also encourage investors with longer-term time horizons to consider emerging markets despite their recent underperformance, as they too offer compelling value.
"There are few bargains in fixed income markets. With rates likely to rise and inflation still low, we would avoid both long-dated Treasuries and Treasury Inflation Protected Securities (TIPS). Instead, we advocate sticking with fixed income credit sectors, including high yield bonds. Additionally, we believe municipal market fundamentals are sound and that muni bonds look attractive—especially as investors complete their 2013 tax returns and feel the impact of higher taxes."
14 Things Advisors Should Do If They Want To Be Successful In 2014 (Investment News)
Financial advisors need to do 14 things if they want to be successful in 2014, according to Robert Sofia at Investment News. 1. They shouldn't forget about Generation X and Millennial investors considering 29% of wealthy investors are under the age of 50 and that Gen X and Millennials are expected to inherit over $41 trillion by 2052. 2. Advisors should update their website. 3. They should also invest in better technology. 4. They should take social media more seriously. 5. Make better use of video to market. 6. Advisors should specialize instead of making their practice appeal to everyone. 7. Advisors should ask clients what they want and expect.
8. They should also "wow" clients with surprises, "while clients are unlikely to talk about the annual review they had with their adviser, they will brag about how he threw them a surprise wedding anniversary party." 9. They should host social events. 10. They should have a minimum account size even if it is as low as $50,000 because it sends the message that their time is worth more than the average advisor. 11. They should have a coach and a confidant. 12. The should make time for business planning. 13. Advisors should get better at delegating tasks. 14. Finally, they should have writhed plans that will force them to stick to their goals.
Page 2 of 3 - FINRA Warns Against Conflicts Of Interest When It Comes To IRA Rollovers (FINRA)
61% of Americans are worried about not having enough money for retirement, according to a Gallup poll. So, FINRA has said it will be watching broker dealers closely for conflicts of interest. Typically, when a plan participant is leaving an employer they can do one of four things 1. Leave the money with the former employer if that is an option. 2. Roll over the assets to his new employer's plan if a rollover is possible. 3. Roll over into an IRA. 4. Cash out.
When firms and their registered representatives recommend that an investor move their money into an IRA they could earn a commission or fee, whereas they wouldn't get one if they kept the money with an old employer or transferred it to a new one. "FINRA urges broker-dealers to review their retirement services activities to assess conflicts of interest. Firms must supervise these activities to reasonably ensure that conflicts of interest do not impair the judgment of a registered representative or another associated person about what is in the customer’s interest and that they neither confuse investors nor interfere with important educational efforts."
The Most Important Driver Of Profit Margins (Goldman Sachs)
Goldman Sachs' Jan Hatzius doesn't profit margins will contract in 2014. This is because the gap between inflation and unit labor cost inflation is the most important driver of profit margins. "When prices grow faster than unit labor costs, firms typically manage to raise their profit margins, and vice versa. In our view, the price/ULC gap is likely to move back into slightly positive territory in 2014," he writes.
"Of course, the price/ULC gap is not the only driver of margins," continued Hatzius. "But other factors are also likely to look reasonably friendly. We expect foreign profits to improve in 2014 as the global economy gathers some momentum, and see no major changes in corporate income taxes or financial profits."
After the stock market's great run in 2013, Wall Street economists are already upwardly revising their 2014 forecasts. Citi's Tobias Levkovich who had an initial S&P 500 target of 1,900, just revised it up to 1,975, though he does warn that there could be a 5-10% correction in the first half of 2014. "The good news from credit conditions, hiring intentions and capital spending plans on the economy and likely earnings growth can provide upside appreciation potential while sentiment, intra-stock correlation and even valuation suggest concern," added Levkovich. "Overall, we can get to a 1,975 kind of outcome, but we may also see choppier markets and early indicators on volatility also intimate reasons to be worried."