Many investment and market gurus have made their predictions for 2016. The problem is, argues Larry Swedroe, the media has done a poor job in the past of holding these gurus accountable. Swedroe, the director of research for The BAM Alliance, writes on ETF.com that he will check in every quarter to see how they’re doing. He points to eight “sure things” that gurus have predicted this year: the Fed will continue to raise rates; the economy will improve; the dollar will rise; stocks should be avoided; small-cap will underperform large-cap; international stocks will underperform domestic; volatility will increase; and the fourth quarter will bail us out. Some say predictions are a fool’s errand. Will these hold up? We’ll find out.
Investors are irrational at times. Particularly when the Dow drops by 300 or more points multiple times in a week and the S&P 500 hits a 15-month low. Dr. Daniel Crosby, executive director for the Center for Outcomes, writes in 10 Surefire Ways to Ruin Your Financial Future that many of the common investor responses to volatile markets have been disproven. Does your client argue they’re going with their gut on their next investment? Perhaps gently remind them that rules-based approaches beat or equal even expert human judgment 94 percent of the time. And right before they fire you to go it alone, you may want to remind them Aon Hewitt, Morningstar and Vanguard all estimate the value of financial advice equates to about 2 to 3 percent per year in excess returns.
U.S. Treasury Secretary Jacob Lew is leaving the January chill of northeast for warmer climes in Puerto Rico on Wednesday, but don't expect to find him sipping Cuba Libres on the beach. Lew has been tapped by the federal government as the point person to help the U.S. territory get its fiscal house in order. Puerto Rico is drowning in a sea of red ink and struggling to make its bond payments, according to the Washington Times, which could lead to significant service cuts to the island. Lew is expected to meet with Gov. Alejandro Garcia Padilla and his economic team to discuss the White House's proposal to Congress to help bail out the island. House Speaker Paul Ryan has placed a March 31 deadline on the House committee working with Puerto Rico to formulate a "reasonable solution."