January, 2024

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Should Clients Own Bitcoin? Our Authors Respond

Advisor Perspectives

I asked our authors and guest contributors the following question: Given the availability of spot bitcoin ETFs, would you recommend them (or any other cryptocurrency allocation) to your clients?

Clients 128
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Americans Are Better Off Than You Think

A Wealth of Common Sense

Bernie Sanders was railing against wealth inequality again last week: The rich do control most of the financial assets in this country. The top 10% owns close to 90% of the stock market in the U.S. Most of the income gains in the past 40 years or so have gone to the wealthy. That’s not great. But the idea that two-thirds of all Americans cannot cover an emergency expense simply doesn’t hold up to the facts.

Assets 137
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Lessons From the Bear Market

The Irrelevant Investor

The S&P 500 hit an all-time high today. It hasn’t done that since the first trading day of 2022. That’s 512 trading days and 747 calendar days. Just over two years. By historical standards, that wasn’t so bad. It didn’t feel great, but a two-year bear market is as normal as a blizzard in the northeast. They’ve happened before.

Marketing 110
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MiB: Cathy Marcus, Co-CEO, Global COO of PGIM Real Estate

The Big Picture

 This week, we speak with Cathy Marcus , co-chief executive officer and global chief operating officer of PGIM Real Estate , which manages over $200 billion in assets. As co-CEO, Marcus develops and leads the company’s global strategy; as global COO, she is responsible for overseeing business and investment operations globally. She is also co-chair of the board of directors of RealAssetX , PGIM Real Estate’s innovation lab aimed at accelerating advancement in the real assets industry.

Startup 296
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How to Navigate Revenue and Expense Management: Competitive Insights for Financial Success

Speaker: Hilary Akhaabi, PhD - Founder, Chief Financial & Operations Officer at Go Africa Global

In the fast-paced world of corporate finance, staying ahead of the curve is crucial for sustainable growth and profitability. This exclusive webinar with leading expert Hilary Akhaabi, PhD, will teach you practical ways to navigate complex financial landscapes and enhance your company's revenue management capabilities. Whether you're aiming to refine your financial strategies or seeking innovative solutions to drive performance, this new session is for you!

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Monday links: looking for bad ideas

Abnormal Returns

Private equity Dividend recaps are back on the table for private equity. (axios.com) When a company raises debt, and interest rates rise, trouble ensues. (adweek.com) The legal case for opening up private equity to the masses. (papers.ssrn.com) The private equity industry doesn't love academic research about its performance. (institutionalinvestor.com) Gambling Americans are going to the casino.

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CB Leading Economic Index: Continues to Signal Underlying Weakness

Advisor Perspectives

The Conference Board Leading Economic Index (LEI) fell for a 21st straight month in December as the LEI continues to signal underlying weakness in the U.S. economy. The index inched down 0.1% from last month to 103.1, the index's lowest reading since May 2020.

Economics 133
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This is the Best U.S. Economy Since the 1990s

A Wealth of Common Sense

As millennials reach middle age (hand up), prepare yourself for a wave of 1990s nostalgia. Remember MTV? Remember life before smartphones and social media? Remember rap groups? Remember life before everyone was forced to care about politics? Remember Saved by the Bell? Remember going to Blockbuster on a Friday night to pick out a movie? Finance people also have an affinity for the 1990s economy.

Economy 140
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Moving Average Distance and Time-Series Momentum

Alpha Architect

For investors that use trend-following strategies, Avramov, Kaplanski, and Subrhmanyam provided new evidence supporting momentum strategies and showed that the distance between short- and longer-term momentum signals provides additional explanatory power in the cross-section of equity returns. Moving Average Distance and Time-Series Momentum was originally published at Alpha Architect.

Investing 125
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60 Years of Stock Market Cycles

The Big Picture

Source: Visual Capitalist The post 60 Years of Stock Market Cycles appeared first on The Big Picture.

Marketing 296
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2024 Lending Outlook: Innovations and Evolutions in the Financial Sector

As we step into 2024, the lending landscape evolves rapidly with technology, regulations, and market dynamics driving change. For banks and financial institutions to stay competitive and meet the evolving needs of their customers, these drivers must be understood and engaged with. Lenders can anticipate significant transformation fueled by technological advancements, regulatory shifts, and changing consumer behaviors.

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Monday links: sowing and reaping

Abnormal Returns

Markets Six reasons to bullish. Six reasons to be bearish. (ritholtz.com) The 10 biggest FTSE 100 companies by market cap, over time. (ft.com) What you need to know about the spread on mortgage bonds. (housingbrief.com) Finance The spot Bitcoin ETF price war is already on. (axios.com) Property and casualty insurance providers are struggling to keep up with weather-related claims.

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Construction Spending Increased 0.4% in November

Calculated Risk

From the Census Bureau reported that overall construction spending increased: Construction spending during November 2023 was estimated at a seasonally adjusted annual rate of $2,050.1 billion, 0.4 percent above the revised October estimate of $2,042.5 billion. The November figure is 11.3 percent above the November 2022 estimate of $1,842.2 billion. emphasis added Private spending increased and public spending decreased: Spending on private construction was at a seasonally adjusted annual rate of

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Michigan Consumer Sentiment Soars in January

Advisor Perspectives

Consumer sentiment soared in January to its highest level since July 2021, according to the preliminary report for the Michigan Consumer Sentiment Index. The index came in at 78.8, up 9.1 (13.1%) from the December final. The latest reading was above the forecast of 70.0.

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What Comes After a Good Year in the Stock Market?

A Wealth of Common Sense

2023 was a good year for the stock market. Bad years in the stock market are typically followed by good years (but not always): The obvious follow-up here is: What happens after good years? Or how often do we see good years followed by good years? There are, of course, bad years that follow good years, just like there are good years that follow bad years.

Marketing 131
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Banking on Loyalty: Holistic Financial Advice for Unparalleled Business Growth

Speaker: Joe Buhrmann, MBA, CFP®, CLU®, ChFC® Senior Financial Planning Practice Management Consultant eMoney Advisor

During an era of evolving consumer preferences, the banking sector is undergoing a profound shift. As customers continue to broaden their perspectives, banking professionals must support their customers' financial wellness by providing holistic financial advice that aligns with individual goals and circumstances. Without adapting, financial institutions will find that loyalty may crumble amid uncertainty.

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Burt Malkiel & Alex Michalka’s Insights for Investors in 2024

Wealthfront

In planning your investment strategy for 2024 and beyond, there are wise principles to keep in mind: While no one can predict how market prices will move in any particular period, there are time-tested general rules that can put the odds of success squarely in your favor. In this letter we will offer some simple […] The post Burt Malkiel & Alex Michalka’s Insights for Investors in 2024 appeared first on Wealthfront Blog.

Planning 122
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Joe Duran's New RIA Investment Firm Hires Opto Investments Co-Founder

Wealth Management

Will Armenta co-founded the "alts-for-advisors" platform with Joe Lonsdale, and advises Lonsdale's $6 billion venture capital fund. He'll be a managing director at Duran's Rise Growth Partners.

Investing 121
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Top clicks this week on Abnormal Returns

Abnormal Returns

Top clicks this week On the importance of time when it comes to compounding. (humbledollar.com) How to use AI to do fundamental company analysis. (howardlindzon.com) How to use a negative checklist. (novelinvestor.com) Where are real interest rates going to settle? (mrzepczynski.blogspot.com) You can only control your own behavior. (creativeplanning.com) There's no magic in personal finance, but there are some surprising hacks.

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MBA: Mortgage Applications Decreased Over a Two-Week Period in Latest Weekly Survey

Calculated Risk

From the MBA: Mortgage Applications Decreased Over a Two-Week Period in Latest MBA Weekly Survey Mortgage applications decreased 9.4 percent from two weeks earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending December 29, 2023. The results include adjustments to account for the holidays.

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Navigating Financial Storms: Strategies for Building Resilient Balance Sheets

Speaker: Carolina Aponte - Owner and CEO, Caja Holdings LLC

In today's rapidly changing business environment, building a resilient balance sheet is crucial to the survival of any business. A resilient balance sheet allows a company to withstand financial shocks and adapt to changing market conditions. To achieve this, companies need to focus on key strategies such as maintaining adequate liquidity, managing debt levels, diversifying revenue streams, and prioritizing profitability over growth.

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Prepare for the Changing Landscape in Cybersecurity

Advisor Perspectives

This article examines the challenges associated with the SEC’s proposed rule, the expected effect on financial services firms, and how firms can prepare now for the new rule.

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What is the Historical Rate of Return on Housing?

A Wealth of Common Sense

A reader asks: Ben, I love reading your work. Stocks, bonds, and cash are the categories to compare but it hit me as a “boomer” retired, what about home ownership as a comparison? Stay warm! This question was in response to my recent piece on the historical returns for stocks, bonds and cash: There are typically a fair number of requests for other asset classes whenever I post this kind of data.

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The Smart Money Can Buy Stocks, but They Can’t Sell Them

Alpha Architect

The paper aims to investigate whether experienced institutional portfolio managers (PMs) exhibit behavioral biases in their decision-making processes, specifically focusing on the selling decisions. The Smart Money Can Buy Stocks, but They Can’t Sell Them was originally published at Alpha Architect. Please read the Alpha Architect disclosures at your convenience.

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T3: Rapid Uptick in Tax and Estate Planning Software By Advisors

Wealth Management

Double-digit percentage point gains in both were notable findings in the annual advisor tech survey revealed at the T3 conference this week, as was the persistently low adoption of cybersecurity tools.

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Putting the ‘Tech’ in Spend Management Techniques

Speaker: Wayne Spivak, President and CFO of SBA * Consulting Ltd., Industry Writer, Public Speaker

If you’re lost in the world of spend management needs and your GAP analysis is lacking perspective on the future state of your business performance, listen up! With the advancement of technology, the implementation of spend management best practices and concrete GAP analyses is more streamlined and accessible than ever before. And while this may sound like great news for you and your clients, it won’t be worthwhile unless you have the latest techniques to back up your ambitions!

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Friday links: irrational explanations

Abnormal Returns

Crypto Fidelity Wise Origin Bitcoin Fund ($FBTC) has surpassed $1 billion in AUM. (theblock.co) Why the churn at the Grayscale Bitcoin Trust ($GBTC) matters so much for Bitcoin. (ft.com) Vanguard made the right call. (morningstar.com) Companies Airbnb ($ABNB) didn't end up killing the hotel (stocks). (paulrlamonica.substack.com) Meta ($META) now wants in on the AGI game.

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MBA: Mortgage Applications Decreased in Weekly Survey

Calculated Risk

From the MBA: Mortgage Applications Decrease in Latest MBA Weekly Survey Mortgage applications decreased 7.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 26, 2024. Last week’s results included an adjustment to account for the MLK holiday.

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How Advisors Can Reduce the Risk of Long-Term Care

Advisor Perspectives

The world population is aging rapidly – 65 million people over the age of 65 will live in the U.S. by 2030. The disparity between the length of time a person lives (their lifespan) and how long they are in good health and can function well (their healthspan) is widening. As a result, a significant portion of aging adults are spending longer portions of their lives in poor health as they struggle to pay for caregiving assistance.

Insurance 119
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Historical Returns For Stocks, Bonds & Cash

A Wealth of Common Sense

Bonds have had a rough go at it these past few years. 2021 was a down year. 2022 was the worst year in history for bonds. 2023 was better although rates were so volatile that the ride certainty wasn’t much fun to be on. In the 10 years ending 2023, 10 year Treasury bonds had an annual return of just 1.5%. The annual inflation rate over that same time frame was 2.8%, meaning you lost money on a real basis in the benc.

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Connect, Care, Convert: Secrets to Establishing Trust with Niche Markets and Turning Them Into Clients

Speaker: Lynnette Khalfani-Cox, The Money Coach®

Niche markets represent a huge opportunity for the financial services industry in America. From college students and women to communities of color and low-to-moderate-income households, niche populations have specialized financial needs – but they often underutilize many valuable financial products and services. How can you better connect with these consumers?

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When the Bulls Disappear

The Irrelevant Investor

“Buy when there’s blood in the streets” isn’t just a cute saying, it’s great investment advice.* The American Association of Individual Investors has been putting out a weekly sentiment survey every week since 1987. Something notable happened in the spring of 2022 that historically has been very bullish. Enthusiasm for stocks completely vanished.

Investing 115
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LPL Settles With FINRA For $6M Over Reg BI Lapses

Wealth Management

The firm agreed to settle charges with the regulator after it charged LPL Financial supervisors failed to ensure the suitability of certain transactions made by reps on behalf of clients.

Clients 120
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Research links: overly complicated models

Abnormal Returns

Research How to model private credit returns, per AQR. (institutionalinvestor.com) Another example showing the impact of screening out negative momentum stocks with lottery-like characteristics. (alphaarchitect.com) How to build a better low vol strategy. (blogs.cfainstitute.org) How smartphones have affected the transmission of investor sentiment. (papers.ssrn.com) Bloomberg has built an AI tool to summarize earnings calls.

Assets 271