Today we digest the 2016 market seesaw that whitened the knuckles - if not the hair - of many an investor. Why? Mainly because of the coincidence of some compelling thought on this topic.
Former advisor Jim Sloan gives voice to a widely held grim view that markets are due to retreat. He sees it as mathematical, at least for bonds:
"The recent bond returns are unrepeatable. Why? The yield of the 10-year Treasury is under 2%. You have less than 2 points to go. You might get that 2% in several forms, with immediate cap gains if rates fall to 1%, but 2% is it. It's what you will get to maturity. Again, this isn't opinion. It's arithmetic."
Sloan then goes into stocks' historically high valuations, concluding with the highly contested "this time it's different" thesis, i.e. don't expect average historical returns in the next cycle.
SA contributor Ronald Surz also reviews market history - specifically, the history of the past quarter; he shows there was money to be made, but retains his view that the U.S. stock market will lose 19% this year.
And, below, more insights for advisors on wealth management in today's news:
- JD Power's ranking of advisory firms gives top honors to Schwab; sees advisors as validators, or sounding boards, but not final decision makers.
- Douglas Tengdin explains why retirement advice leaves many investors cold.
- Roger Nusbaum turns 50 and contemplates a future "retirement" doing what he's doing already.
- Mark Haefele, UBS Wealth Management's global chief investment officer, offers a reassuring view of China's economic stabilization.
- Review of the new book "Misbehaving" by behavioral economics founder Richard Thaler.