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Though dividend-paying stocks are trading at 15x trailing multiples compared with 14x P/E for the rest of the market, David Rosenberg says the divided theme is far from over because baby boomers are still looking for a "retirement map".
"Dividend-paying stocks generated a total return of 42% in the past five years, handily beating the 26% return triggered by the rest of the universe. So where we go from here is quite clear. It's not just about 'yield' any more but about the company's ability to grow the dividend over time and do so without resorting to debt markets or sacrificing reinvested growth in the company. It is a fine line but dividend growth is now vital and there are now industrials and consumer products companies (not just utilities and telcos) who fit that bill.
"..What so many pundits are missing –and this is so evident in the bond market as well – is how the secular demographic shifts are causing a semi-permanent reassessment of how much 'income' in general – whether in income equity, long-short strategies or in fixed income – and this theme has many more legs to go, in my opinion."
A Massachusetts regulator is asking the SEC to ban an arbitration clause found in contracts between advisors and their clients. The clause prevents clients from taking their claims on losses or other damages to court.
Nearly half of investment advisors surveyed in Massachusetts had the clause in their contracts and Secretary of the Commonwealth William F. Galvin wrote to the SEC saying this clause was "troubling and a cause for regulatory concern".
Vanguard Group's Chairman Emeritus Jack Brennan said this is "the best time ever" to be a financial advisor and this is in large part because of products like ETFs.
ETFs he said give advisors time to build their business since they offer diversity and are transparent and tax-efficient. "For 19 basis points, you get the Harvard endowment." Brennan did warn against too much innovation among ETFs for instance actively managed ETFs since that would introduce manager risk.
President Obama delivered his State of the Union (SOTU) speech last night in which he called for $9 minimum wage.
Most SOTU speeches cause a less than 1 percent move in stock markets. Here is a look at the post-SOTU stock market moves since 1934.
Why The Great Rotation Won't Be As Good For Stocks As You Think (Marc To Market)
Those talking about the Great Rotation have argued that money is moving out of bonds into stocks and that there is more money in equity funds now that there was in all of 2012. But Marc Chandler at Brown Brothers Harriman disagrees.
"There is a third asset class that needs to be integrated into the analysis: cash. After surveying the data and various reports, it looks to us that the flows into equities is not coming out of fixed income but rather money market funds and deposits
"Through last week, equity funds (counting ETFs) saw an inflow of around $70 bln (compared with $23 bln in all of 2012). The $30 bln inflows being reported by bond funds is a major argument against the "Great Rotation", though this is a bit off the pace seen last year ($40 bln inflows during the same period)."
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