FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors.
Business Insider's Sam Ro asked Jack Bogle, founder of Vanguard, for his investment must-reads. Bogle picked "The Intelligent Investor," "A Random Walk Down Wall Street," "Unconventional Success," "The Four Pillars of Investing," "Extraordinary Popular Delusions and the Madness of Crowds," and "The Bogleheads' Guide to Investing."
HP Might Have One Of The Great Undiscovered Asset Managers (Bronte Capital)
Working through Hewlett-Packard's 10 K's and its defined benefit pension fund, money manager John Hempton writes that HP might have the best hidden fund manager. "Gretchen Tai and Hewlett Packard perform much better than you would expect given the diversity of their portfolio. Gretchen Tai really is one of the great undiscovered asset managers."
Bears Are Passing Around This Recession Indicator (Business Insider)
Bearish investors have been passing around a chart from Lance Roberts of StreetTalkLive that looks at ratio of coinicident to lagging indicators and that is considered a leading indicator of recessions. Each time the ratio has been at current levels according to SocGen's Albert Edwards, the economy has been in or close to a recession.
Schroders Investment Management Thinks 2013 Is A Good Year For Global Equities (Advisor Perspectives)
Going into 2013 investors will start to stock up on equities given that stocks are cheaper than bonds.
Europe has made headway in dealing with its debt crisis and "although in absolute terms the fiscal stance in the region will tighten in 2013, the pace of discretionary fiscal consolidation is likely to slow." And the U.S. economy is "unlikely" to enter a recession, all of which will support global stock markets. The "emerging markets supercycle theme remains as relevant as ever," as well.
Financial advisors are increasingly beginning to question the Modern Portfolio Theory according to which investors can "maximize returns for a given amount of risk by selecting the right mix of assets." Some now believe that this theory only works for long-term investors and that it doesn't adequately account for black swan events and the like.
Gluskin Sheff's David Rosenberg is out with his market expectations for 2013. In today's "Breakfast with Dave" note he writes that investors should focus on dividend growth, defensive stocks, and gold miners — an emerging stock market strategy he mentioned before. He also writes that interest rates are going nowhere, that corporate bond prices could increase, and that oil looks attractive in the long-term.
"The conservative investor should maintain a defensive posture. An emphasis on fixed income and bond proxies within the stock market. Accumulation of cash flows is key, as it was this year. But there will be opportunities, as there are every year, to take advantage of under-priced securities."
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