Staying On The Sidelines: Asset Allocation Daily

Jan. 11, 2019 8:38 AM ET6 Comments
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SA For FAs
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Summary

  • Franklin Templeton Investments: The utilities industry maintains the ability to continue to expand dividend growth for years to come.
  • Tom Lydon: Factors have routinely outperformed the market, but that outperformance has decayed over the past decade.
  • Thought For The Day: An investor with a history of (or thoughts of) staying on the sidelines is exactly the sort who should consider engaging a financial advisor.

Utilities

“We think earnings and dividend growth for utilities seem to be safely locked in a band of around 4-6% annually over the next five or six years” (Franklin Templeton Investments)

Factor Investing

“Viewed broadly, factors have routinely outperformed the market since 1989, as a substantial body of academic research indicates…Over the past decade, however, "smart beta" seems less "smart" and more "beta".” (Tom Lydon)

Brexit

“As Parliament looks set to vote down Theresa May’s Brexit deal, time is fast running out to find and implement an option that lawmakers can rally around. One way or another, it’s looking more likely that the UK will be left with no choice but to apply for an extension to the Article 50 period” (ING Economic and Financial Analysis)

Thought For The Day

As in any profession, some financial advisors are outstanding and some are mediocre. But one thing that both of those types have in common is that they generally follow a process that involves having their clients invested in the stock market. That is a not insignificant advantage when considering that those who remove themselves to the sidelines tend to miss out on the gains that stock-market investing generates.

This thought occurred to me based on my discussion, in a podcast published yesterday, with U.C. Berkeley behavioral economist Shachar Kariv. Most of the conversation reverted time and again to financial advisors, even though I didn’t intend it to; that’s where he brought the conversation, seemingly assuming that that is the more effective way to invest. (I intend to ask him this directly in a future podcast.) I am certain that many investors can get by just fine without professional assistance, but I am equally certain that another large cohort is bound to do very poorly on their own, and the difference between them is based not on intelligence, but on personality. Some

This article was written by

SA For FAs profile picture
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GIL WEINREICH - Author of "The Mentor," a unique parable for financial advisors and those who aspire to become one. I have worked in the FA arena since 1997, and during that time, the New York State Society of CPAs twice awarded its prestigious Excellence in Financial Journalism award to me for a monthly column I wrote on business ethics. Previously, I reported on international news for Voice of America (where I was awarded a newsroom writing award) and prior to that worked as an editorial assistant at U.S. News and World Report. I live with my wife and children amidst the verdant and vibrant hills and dales of Jerusalem.

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