It's an old-wives tale at this point: When the markets are bad, buy gold. Not so fast, according to data analytics platform Kensho. The firm looked at the past few market drops and how the precious metal performed. The results were mixed, at best. When the CBOE Volatility Index surges 80 percent or more in a single month, gold trades negative half the time as well, and loses more than 1 percent on average. In addition, since 2005, the S&P 500 lost 6 percent or more in a week 18 times. During those weeks, gold traded negative 61 percent and lost 0.1 percent on average. And when the Dow drops 6 percent or more in a week, gold does even worst, trading lower 73 percent of the time and falling more than 1 percent on average. By all accounts, gold has lost its luster.
$65 Billion More in Fines Expected
Global investment banks have paid about $260 billion in regulatory fines since 2009 and there doesn’t seem to be an end in site. According to research from Morgan Stanley, the top 25 largest banks globally will shell out an additional $65 billion to settle with regulators through 2017. The forecast is worse for European banks like UBS and Credit Suisse, which the report claims have as much as one-third of their litigation costs still outstanding, according to ValueWalk. The top five biggest offenders? Bank of America ($65.6 billion), JP Morgan ($42.4 billion), Britain’s Lloyds ($26.6 billion), Royal Bank of Scotland ($16.7 billion) and Barclays (16.5 billion).
Are Advisors Wrong About Paying Off Debt?
New research finds that many so–called financial experts may be wrong when telling clients to focus on the highest-interest debt first and pay the minimum to all others. While it may be the mathematically optimal solution, it does not take into account human behavior. A study by the Journal of Marketing Research found that participants completed a tedious assignment faster when tasks were arranged from smallest or easiest to largest or hardest. Paying off small debts can give investors a quick victory that motivates them to meet larger goals, and some financial analysts say this method works in the real world to help get people in the black quicker. The downside is paying more interest over time and some people can get worn out, but helping clients see that a plan is working can help them stick with it.
Trends in African American Financial Health
Newark-based Prudential Financial has released its third study on African American financial health, drawing the conclusion that African Americans across the country are increasing in the area of financial stability, but are not planning for the future. The survey, which questioned 1,043 African Americans, showed that 54 percent believe their financial situation to be better than that of their parents when they were their age. A total of 56 percent of those in the study feel better off now than they did five years ago. "This study paints a picture of an increasingly financially savvy and affluent African American community," said Mammen Verghis, a marketing vice president with the company, In terms of financial planning, only 14 percent of African Americans in the study reported currently working with a financial advisor.