Forecast, strategies, events

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Aug 18, 2010 3:49 pm

What is you outlook for the markets over the next couple of years. Many top advisors are grim. Investors have pulled back.

Got some good ideas from a Pru sendout.

1 Equity income: dividends account for 46% of the S&Ps return since 1930. Divs have been particularly important during periods of poor stock performance.

2. Good stuff on the low correlation of real estate securities and commodities compared to stocks and bonds.

3. Good info on short term bonds - competitive yields, potential appreciation and stability during a (slow) growing economy, relative strength of shorter duration corporates vs. longer term govt if and when interest rates raise.

I'm hoping to make a longer list of topics for my lunch events, if anyone wants to share or discuss, it might be more interesting than talking about cold calling.

I think the markets will suck for a while, but there is plenty of opportunity to gain new client relationships and increase AUM if anyone wants to focus here a little and compare results on relationship marketing, starting in the fall through spring with a break for the holidays. Informal peer motivation.

Aug 19, 2010 12:44 pm

I'm not smart enough to predict the next 12-18 months, but beyond that I am pretty confident medium and long-term bonds will get hammered and equities will finally start to perform.  Now obviously many clients need at least some fixed income, so I'm
definitely talking about marginal changes and incremental investments
and not an extreme portfolio makeover.  On the margins, I too would focus on dividend payers, since they can help make up for lost bond income and still do well when equity markets pick up.  I would definitely put new money in blue chip dividend payers before I would be in medium or long-term bonds.  And any bond portfolio should be laddered in a way to mitigate the impact of rising rates.

As for real estate, there is some long-term potential there, but still a lot of risk.  Fannie and Freddie reform is imminent but no one knows yet what impact that will have on the housing market.  I'd be inclined to cherry pick among beaten down commercial real estate investments. 

With commodities, I'd prefer those that are used in manufacturing and development (e.g., copper) to gold, which is priced as a hedge for a global economic meltdown, which is highly unlikely.

Lastly, I agree this is a much better subject than cold calling!

Aug 19, 2010 12:58 pm

Nice. I see GM IPO common stock won't pay a dividend. I didn't realize Ford isn't paying one. And then you have companies like Intel, wasting money buying Mcafee. What's up with that? Have to be careful not to load up on junk with the large cap blue chip. Junk that doesn't pay dividends.

Aug 19, 2010 2:20 pm

True.  I was thinking P&G, J&J, companies like that.