Economic theory posits that investors require high expected returns when cyclical consumption is low in economic contractions and low expected returns when cyclical consumption is high in economic expansions. New research is consistent with that theory.
There isn’t convincing evidence that a style-timing strategy, based on business cycles, can be expected to be profitable going forward.
There are logical explanations for why the size premium may have shrunk. But there also remain simple, intuitive, risk-based explanations for why the premium should persist.
Diminished cognitive skills, often the result of Alzheimer’s disease, are the greatest threat to the financial stability of your older clients, particularly those over age 65. A new book directed to advisors provides the tools to identify and overcome those threats.
In biblical tradition, the four horsemen of the apocalypse are a quartet of immensely powerful entities personifying the four prime concepts – war, famine, pestilence and death – that drive the apocalypse. For today’s investors, the equivalent is historically high equity valuations, historically low bond yields, increasing longevity and, as a result, the increasing need for what can be very expensive long-term care.
Owners of privately held businesses face unique challenges – most importantly, weighing how the sale of their company will affect their financial future and life style. Advisors are eminently qualified to help evaluate those decisions.
Changes in tax, regulatory, or budget policy can be rescinded – albeit with difficulty – by a subsequent administration. A perception that the US is no longer prepared to stand up for its allies in the international community is much less reversible.
At least for tax-advantaged investors, dividends are irrelevant: They are neither good nor bad in terms of forward-looking return expectations. Therefore, while there is no reason to exclude dividend-paying stocks, focusing solely on them leads to less diversified (less efficient) portfolios.
Every household has a life event annually that will impact their investment objectives and risk score. Improve your first impression by utilizing a robust risk-tolerance questionnaire.
REITs are vulnerable to an increase in interest rates or an economic contraction. If you have been thinking of increasing your allocation to REITs to generate more cash flow, this new research – and current valuations – should serve as a cautionary warning.